Finance Manual - AssamIntroduction of Finance Manual 1.1 Objectives and Structure of Financial Management Manual: The manual lays down the financial management system for to be followed

:Contents:

NATIONAL RURAL LIVELIHOODS MISSION

Finance ManualDraft Copy

Revised 30-03-2012.

A S S A M R U R A L L I V E L I H O O D S M I S S I O N S O C I E T Y .

Chapter Particulars Page No

Chapter-1 Introduction of Finance Manual

1.1 Objective & Structure of FM Manual1.2 Preamble of FM Manual1.3 Mission Implementation Set up1.4 Applicability & Administration of Manual1.5 Organization Structure of ASRLMS1.6 Implementation Framework1.7 Table:- FM Roles of State Office and District NRLM1.8 Project Summary1.10Project Objectives1.11Guiding Principles1.12Project Scope1.13Project Components & Sub Components1.14Methodology1.15 Intensive Block Approach1.16Non Intensive Block Approach1.17Funding & Financing Plan

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Chapter-2 Planning & Budgeting

2.1 Objectives of Budget System2.2 Budget Process2.2.1 Budget Period2.2.2 Budget Calendar2.3. Budget preparation and Approval Process2.3.1 Basis of Budgeting2.3.2 Preparation of Budget at Block Level2.3.3 Preparation of Budget at District Level.2.3.4 Compilation and updating of budget at SMMU level2.4 Approval by Governing Body and Allocation of Budget2.5 Budget Format.2.6 Budget Variance.

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Chapter -3 Finance of the Mission

3.1 Fund Flow to Intensive Districts3.2 Fund Flow to Non-Intensive Districts3.3 Transfer of Funds3.3.1 Fund Flow of Mission3.3.2 Procedures of Release of Funds to State3.3.3 MoRD to State – Key Points3.3.4 Transfer of Fund SMMU to DMMU3.3.5 Transfer of Fund SMMU to BMMU3.3.6 Activities for which BMMU will receive funds3.4 Expenditure and payment of fund3.5 Sanctioning of Expenditure3.5.1 General Principles Governing all Expenditure to be incurred in Missionfunds.3.6 Linkage of DRDA with BMMU on Financial and Technical Matters3.6.1 Relationship on Financial and Technical Matters.3.6.2 Review of Progress and Performance.3.6.3 Collaboration for Financial Inclusion.

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3.6.4 Reporting.3.6.5 Members in Banking Committees.3.6.6 Fund Flow.3.6.7 Financial and Technical Appraisal Committee.3.7 Financial and Technical Committee of SMMU3.8 Financial and Technical Committee of DMMU3.9 Linkage of BMMUs with Block Development Administration inFinancial Related Matters3.9.1 Relationship with Financial Matters.3.9.2 Review of the Progress and Performance.3.9.3 Collaboration for Financial Inclusion.3.9.4 Reporting.3.9.5 Fund Flow.

Chapter-4 Accounting Policies and Framework

4.1 Core system of Accounting4.2 Method and Concept of Accounting4.3 Accounting Centres4.4 Accounting Policies, Procedures and System at State Level4.5 Chart of Accounts4.6 Bookkeeping and Accounting4.7 Accounting and Financial Procedures at Mission Units4.8 Accounting at SMMU,DMMU and BMMU level4.8.1 Receipt Accounting4.8.2 Payment Accounting4.8.3 Accounting of Payment to BLF/VLF4.8.4 Bank Reconciliation Statement4.8.5 Accounting for Advances4.8.6 Analysis of Advances4.8.7 Accounting of Fixed Assets4.9 Correction of Entries4.10 Closure of Books of Accounts at BMMU, DMMU4.11 Closure of Books of Accounts at SMMU4.12 Bookkeeping and Accounting at Community Level AccountingCentres4.13 CIF Accounting4.13.1 Records and Document to be maintained for CIF Accounting at differentAccounting Centres4.14 Types of CIF to be given to Community Level Organization(BLF/VO/SHG)

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Chapter-5 Internal Controls

5.1 Need for Internal Controls5.2 Financial Disciplines

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Chapter-6 Financial Reporting

6.1 Objectives6.2 Types of Reports6.2.1 Internal Reports6.3 External Reports to be submitted by SMMU to NMMU6.4 Interim Unaudited Financial Report (IUFR) of SMMU6.4.1 Consolidated IUFR of State6.4.2 Utilization Certificates6.5 Financial Management Indicators6.6 Reports from VO/BLF to Mission Unit

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Chapter -7 Audit Arrangements7.1 Statutory Audit7.1.1 Objective of Statutory Audit7.1.2 Submission of Annual Audited Reports7.1.3 Monitoring of Audit Process by SMMU7.1.4 List of Accounts to be audited by Statutory Auditor7.2 Statutory Audit Calendar7.3 Addressing of Statutory Audit Observation/Recommendation7.4 Settlement of Audit Queries/Objections7.5 Internal Audit7.6 Objective of Internal Audit7.7 Key Internal Audit Functions7.8 Addressing to Internal Audit Observations7.9 Monitoring of Internal Audit Process7.10 Coverage and Standard for Audit7.11 List of Books of Accounts/Records to be audited by InternalAuditor7.12 Management Letters7.13 Audit by CAG7.14 Submission of Audited Accounts to Higher Authorities7.15 Social Audit7.15.1 Steps in Social Audit7.15.2 Survey method about Social Audit

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Chapter-8 Financial Management Disclosure8.1 Disclosure of Management Framework8.2 Scope8.2.1 Table- Financial Management Disclosure8.3 Monitoring of Financial Management Disclosure8.4 Key aspects to be monitored in FM Disclosure8.5 Financial Management Disclosure in Public Domain in SMMU,DMMU, BMMU offices

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Chapter-9 Staffing and Training8.1 Staffing8.2 Qualification of Roles and Responsibilities of Key Finance andAccounts Personnel8.3 Training8.3.1 SMMU, DMMU, BMMU Staff8.3.2 Block Level Federation8.3.3 Village Level Federation

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ANNEXURES Annexure 1: Format of Annual Work Plan.Annexure 1A: Budget Summary for 1 year for 36 Intensive Block.Annexure 1B: Budget Summary for 1 year for 6 Resource Block.Annexure 1C: Non Intensive Block Budget for 1 year.

Annexure 2: List of Consolidated Interim Unaudited Financialreports for State level.Annexure 2A: IUFR of Source and Utilization of funds.Annexure 2B:IUFR of expenditures against annual agreed work plan.Annexure 2C:IUFR of forecast of expenditure for two six months.Annexure 2D:IUFR of Summary of payments of prior review contracts.

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82

Annexure 3: Consolidated Financial Management Indicators forState level

88

Annexure 4: Form of Utilization Certificates 91

Annexure 5: Register of Fixed Assets. 92

Annexure 6: Register of Outstanding Audit Observation. 93

Annexure 7: Format of Bank Reconciliation Statement. 94

Annexure 8: Chart of Accounts at State level 95

Annexure 9: Terms of Reference for Statutory Audit of ASRLMS. 98

Annexure 10: Terms of Reference for Internal Audit of ASRLMS. 109

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Definitions:-

“Accounting Year”, “Year” or “Financial Year”’ means the year commencing from 1st

April and ending with 31st of March succeeding year.

“Bank” means the Schedule bank in which a separate account is opened to operate theMission funds.

Society - Assam Rural Livelihoods Mission Society.SMMU - State Mission Management UnitDMMU - District Mission Management UnitBMMU - Block Mission Management UnitSHG - Self Help GroupGP - Gram PanchayatVO - Village OrganisationBLF - Block level FederationPOP- Poorest of PoorCBO - Community Based Organisation i.e SHG, VO, BLF, CBLF, CPCPRI - Panchayati Raj InstitutionCPC - Community Producers CompanyCIF - Community Investment FundMission Units - SMMU, DMMU and BMMU.

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Chapter 1

Introduction of Finance Manual1.1 Objectives and Structure of Financial Management Manual:

The manual lays down the financial management system for to be followed by all theimplementing units ie SMMU, DMMU, BMMU of ASRLMs

The main objectives of Finance Manual shall primarily be:a) To achieve better Program management by providing timely information on financial

aspects and on key performance indicators to the Program management.b) To meet the financial reporting requirements of various stakeholdersc) To keep track of funds utilization for each program separatelyd) To ensure that all program related activities are reflected in the Program Financial

Statements and the same be closely aligned with the Program components as per theMedium Term program.

e) To enhance transparency and promote accountability at the Village level and BlockLevel and to promote social audit.

f) To have proper accounting & reporting structure at the Block Level & Community Level.g) To have proper Internal Control issues at the Block level & Community Level.h) To throw spotlight on financial aspects and key performance indicators to monitor

financial progress against action plan and to facilitate management decision making.i) To Promote accountability at different levels,j) To Establish satisfactory internal controls to ensure that policies and procedures outlined

by Mission management on various operational aspects are adhered to;k) To assist in meeting the financial reporting requirements of various stakeholders

including the Government of India, Government of Assam and the World Bank.l) To reflect component-wise, category-wise and account head wise expenditurem) To capture monthly, quarterly and yearly budget information in both physical and

financial termsn) To produce financial reports to show budget vs actual expenditure for the current period

and cumulative to dateo) To facilitate the forecasting of the estimated expenses for the next 2 quartersp) To relate cost data with physical achievements to monitor the Mission progress.

1.2 Preamble of Finance Manuala. The Manual would proactively contribute towards achieving the overall goals of State

Livelihoods Mission Society, Assam by laying down principles, guidelines, andrules/norms to ensure effective and efficient use of funds.

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b. This Manual will contribute towards proper accounting and reporting structure at allMission Units including Community level.

c. This Manual would encourage in building a transparency and accountability in allfinancial and accounting related matters of the Mission.

Financial ProprietyEvery Officer incurring or authorizing expenditure from the Society funds or on behalf of theSociety should be guided by the established principles of financial propriety viz.,a. To enforce financial order and economy at every step.b. To see that financial regulations and directions are observed by his own office and bysubordinate offices.c. To exercise the same vigilance as a person of ordinary prudence would Exercise in respect ofexpenditure of his own money.d. Not to exercise its power of sanctioning expenditure to pass an order which willbe directly or indirectly to his / her advantage.e. The expenditure should not be prima-facie more than the occasion demands.f. The allowances should not be on the whole a source of profit to the recipient.

1.3 MISSION IMPLEMENTATION SET UP

The Mission shall be managed by the Assam Rural Livelihoods Mission Society (ARLMS) aregistered Society. The proposed Mission implementation set up shall be as per MOA.

1.4 Applicability and Administration of the Manual:

This Manual shall be administered in the manner given below:1. Governing Body of the Society will authorize and approve the manual.2. The manual is a dynamic document and may be amended by the Executive Committee asand when required and as learning accumulates with in the Mission. All participants in theProgram are encouraged to share their learning and experiences of the programimplementation so as to improve the proposed arrangements made to attain the programobjectives.3. All amendments made to the Manual shall be:-

a) circulated to all the implementing units by SMMU. The circular/notification shall clearlystate the paragraph(s) and line(s) to be replaced. All such circulars/notifications shall beserially numbered.

b) It will mention the date from which the change shall be effective .c) This manual along with the PIP, AAP, the Community Operations Manual (COM) and the

financial and administrative guidelines and procurement Manual provides the overallcontrol framework for the Mission.

d) This manual shall govern the Financial Management system of Assam Rural LivelihoodsMission Society and should be maintained by the CFO of the SMMU.

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1.5 Organization Structure of Assam State Rural Livelihoods Mission Society.Society Organogram.

Governing Body

Executive Committee

State Mission Director

AssistantMission Director

SPM(Fin Inclusion)

PM-HR,M&E PM-SM,IB & CBPM-Liv, Skill

Dev. &Placements

PM-FinancialInclusion

Block MissionManagement Unit

(BMMU)

District MissionManagement Unit

(DMMU)

Expert-Liv, Skill Dev.& Placements

Expert-HR, M&E

Expert-SM,IB & CB

AccountsTeam

DPMExpert-FinancialInclusion

Block Project Manager

Accounts &SupportTeam.Block Coordinators

SPM –HR &Adm,M&E

SPM – Liv,Skill Dev. &Placements

SPM(SM,IB & CB)

CFO

Finance &AccountsTeam

FinancialAdvisor

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1.6 Implementation ArrangementsThe Implementation arrangement framework consists of simplified arrangements to ensuretransparency and accountability at all levels of the proposed Institutional set up of the Mission.The implementation arrangement is given in the following table.

Level Institutional Arrangement Key Financial ArrangementsState Level Governing Body of Assam State

Rural Livelihoods Mission Society.1.Undertake all activities necessary for thefulfillment of the vision and objectives as laiddown in Article 4 of the Memorandum of Articlesof Association2. Expand the strength of its membershipprovided the expanded strength is filled in themanner prescribed for enlisting the originalmembership.3. Add modify or amend the Memorandum ofArticles of Association and these bye-lawsprovided that all such additions, modifications oramendments shall be aimed at promoting theobjectives of the State Society.4. Remove a member on the grounds listed in therules under clause 5.3.5. Approve the Annual Report, Annual ActionPlan, Balance Sheet and the Annual AuditedAccounts of the State Society.6. Approve the appointment of the auditors of theState Society.7. Delegate to the Executive Committee or theSMD any of the above powers.

State Level Executive Committee of AssamRural Livelihoods Mission Society

1. Develop, Review, revise and approve financialmanagement policies for the Mission.2. Review financial progress at the State level,District and Block level.3. Overall oversight of financial managementfunctions.4. Receive, review and follow up audit reports.5. Consider the Annual Budget and the AnnualAction Plan, its subsequent alterations placedbefore it by the SMD from time to time and pass itwith such modifications as the ExecutiveCommittee may think fit;6.Accept donations and endowment or givegrants upon such terms and conditions as it maythink fit;7.Delegate its powers, other than those of makingrules, to the Chairperson;

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8.Appoint committees, sub-committees, expertpanels, task-force, working or study groups andboards etc. for such purpose and on such termsas it may deem fit and to remove any of them;9. Set HR Policy including staff positions andsalary and incentive structure of the StateSociety;10.Appoint auditors for auditing the accounts ofthe State Society with the approval of theGoverning Body.11.Ensure that the State Society considers anycomments made by funding agencies on theprogress in the implementation of the Missionssponsored and funded by them;12.Monitor progress ASRLMS to ensureachievement of Mission objectives;13.Monitor the financial position of the StateSociety in order to ensure smooth income flowand to review annual audited accounts;

State Level State Mission Management Unit(SMMU) with State Mission Director,Chief Financial Officer, FinanceOfficer, Accounts Officer.

1. Compile annual Budget of Mission based onannual action plan for SMMU and DMMUs &BMMUs and submit the same to MORD forsanction of the Budget.2. Receive funds into its bank account fromMORD as per the allocated Budget.3. Distribute funds to DMMUs and BMMUs on atimely basis as per agreed annual work plans.4. Institute mechanism for proper accounting andauditing of Mission funds at state, district, blockand village level.5. Maintain database on district/block wise,component wise fund releases and expenditure.6. Compile and forward regular quarterly/annualfinancial reports to Govt of Assam, Govt of India.7. Submit regular claims for reimbursement ofMission expenses.8. Implement Capacity Building measures forfinancial management for staff at SMMU, DMMUand BMMU.9. Develop policy and strategy for book keepingcapacity building at block & village level andimplement the same.10. Review financial progress at District & Blocklevel.

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11. Appoint auditors for a sample audit of Blocklevel Federations, VO and SHGs.12. Liaise with statutory auditors for the audit onan annual basis and place the audited accountsbefore the general body of state society and filingof returns with Registrar of Societies.

District Level District Mission Management Unit:With District Project Managerassisted by Accounts Team.

1.Coordinate with BMMUs to Institutemechanisms for proper accounting and auditing ofMission funds at state, district, block and villagelevel.2. Compile annual Budget for the district andsubmit the same to the SMMU.3. Receive funds into its Bank Account from theSMMU as per allocated Budget.4. Coordinate and forward regularmonthly/quarterly financial monitoring reports toSMMU.5. Coordinate with BMMU to ensure regular andtimely audit for district level and block levelactivities.6. Submission of Quarterly Mission Expenditurereports.

Block Level Block Mission Management Unit(BMMU):With Block Mission Manager &Block Accountant.

1.Compile & submit annual budget for the Blockand submit the same to the SMMU.2. Receive funds into its Bank account fromSMMU as per allocated budget.3. Appraise Community Based LivelihoodsBusiness Plans and verify milestone certificatesand release payments to Block Level Federations,VO & SHG on a timely basis as per agreedactivities and relevant contractual arrangementsand utilize funds for its own activities at BlockLevel.4. Compile, prepare and forward regularmonthly/quarterly financial monitoring reports toDMMU/SMMU.5. Ensure implementation of capacity buildingactivities for building skills in Financialmanagement for Village level, Cluster Level andBlock level Institutions etc.6. Facilitate linkages for easy flow of funds forcommunity.

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7. Assist the Block Level Federations, ClusterLevel Federation & VO in implementing theaccountability framework (including publicdisplays and external audits).

8. Train and provide handholding support toMaster Book Keeper in Book Keeping functionsand in preparing monthly and annual reports.9. Monitor the maintenance of Books of Accountsat the Block, Cluster & Village level.10. Submission of quarterly Mission Expenditurereports.

Block LevelFederation

BLF General Body. 1. All the members of the VLF will be members ofBLF general body. The BLF general body meetingshould be held twice in a year. The BLF generalbody meeting will be convened to review theeconomic status of VLF and financial progress ofBLF and approve formation of variouscommittees.


BLF Executive Committee.1. Two members of VLF will be members of BLFexecutive Committee.2. Approve Block Level Federation plan for theBlock.3. Approve Business Plan Completion reports ofBlock Level Federation.4. Appoint Sub Committee and call for actiontaken reports.5. Approve and submit accounts for the fundreceived from BMMU.6.Sign financing agreements for BLF Fund withState Society.7. Receive funds from BMMU against BLFfinancing agreements and deposit the same inBank.8. Plan, implement and supervise activities underBlock Level Federation Funds.9. Engage an Accountant and ensure that allMission expenditures and income are accountedfor in the Books of Accounts.10. Request for funds from BMMUs.11. Provide all Books of accounts and otherrecords for Mission audit.12. Appoint Finance and Procurement Sub-Committees with approval of General Body andentrust them with specific financial management

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and procurement functions.13. Ensure that all financial management andprocurement decisions are documented in theMinutes Books of the Block Level Federation,Finance and Procurement Sub-Committeemeetings.14. Provide all Financial information to SocialAudit Committee.15. Submit monthly, quarterly, half yearly andannual financial reports to BMMU.


Office Bearer Committee. Selection of 5 Members of BLF ExecutiveCommittee to Office Bearer Committee.Criteria for selection of 5 members in office bearercommittee:a.SC, ST, OBC, Minority, general members.b. Senior most/active/social person.c. Treasurer-Book Keeping and record keepingknowledge.The Office bearer committee should consist ofPresident, Vice President, Secretary, JointSecretary, Treasurer. Office Bearer committeemeeting should be held twice in a month.


Community Investment Fund (CIF)Committee

1. Members of Executive Committee of BLF willbe members of CIF Committee.2. With the assistance of BMMU team, prepareand submit CIF plans to BMMU.3. Appraise the Micro credit plans submitted byvillages and recommend for sanction.4. Monitor the administration of CIF funds.5. Prepare the utilization certificates and submit tothe BMMU.6. Provide Capacity building support to the groupsregarding CIF Fund.


Finance & Procurement SubCommittee.

1. Members from Executive Committee of BLF willbe members of Finance & Procurementsubcommittee.2. Guide Block level Federation in theirprocurement functions.3. Ensure that the Financial & procurementguidelines are complied with,4. Assist the VOs to negotiate for highest qualityand best prices.

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5.Ensure that all financial management andprocurement decisions are documented in theMinutes Books of BLF/VO, Finance andProcurement sub-committee meetings6. Guide BLF in its financial managementfunctions.7. Ensure that the Financial and accountingGuidelines framed are complied with.8. Facilitate Audit Process.9. Conduct Periodic surprise cash checks.10. Recovery of loan from members.11. Help in Bank Linkages of eligible SHGs aftercompletion of grading.

Block LevelFederation Social Audit Committee (Sub

Committee)

1. Members from Executive Committee of BLFare member Social Audit Committee.2. Carry out periodic audits (including financial ) ofBlock level Federation, VO and SHG handledactivities.3. Certify all Utilization Certificates and submitregular reports to BMMUs.

Block LevelFederation.

Health & Insurance (SubCommittee)

1. Members from Executive Committee of BLFare member Health & Insurance Committee.2. Will promote medical assistance, health &hygiene awareness programme to Community.3. Will promote life and assets security tomembers.

Block LevelFederation.

Education (Sub Committee.) 1.Members from Executive Committee aremember of Education Sub Committee.2. Will promote educational support to VLFmembers families and to the Community.

Level Institutional Arrangement. Key Financial Management ArrangementsVillage LevelFederation.

General Body All the SHG members should be included inGeneral body. 10 SHG will form 1 VO. TheGeneral Body meeting should be held twice in ayear to review the financial progress andeconomic status of its members.

Village LevelFederation.

Executive Committee. 2 members from each SHGs will form ExecutiveCommittee of VO. Executive body meetingshould be held twice in month to know theeconomic status of SHG members, socialawareness, periodic review of financial progress

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among members. The Committee will approveVO Plan, approve Business plan completionReports of VO, appoint the sub Committees andcall for action taken reports, approve and submitaccounts for the funds received to BMMUs. SignFinancial agreements for VO fund with StateSociety through BMMU.

The executive will receive funds from BMMUagainst VO financing agreements and depositthe same in Mission Bank a/c to be operated bytwo members among the SHG representativeswho are members of VO, will be calledSecretary and Treasurer. It will Plan, implementand supervise activities under VO fund.Engage an Accountant and ensure that all

Mission expenditures and income are accountedfor in the books of accounts. Provide all Booksof accounts and other records for Mission Audit.It will appoint Finance and Procurement sub-committees with the approval of general bodyand entrust them with specific financialmanagement and procurement functions.

Village LevelFederation

Office Bearer Committee. Selection of 5 Members of Executive Committeeto Office Bearer Committee.Criteria for selection of 5 members in officebearer committee:a.SC, ST, OBC, Minority, general members.b.Senior most/active/social person.c.Treasurer-Book Keeping and record keepingknowledge.The Office bearer committee should consist ofPresident, Vice President, Secretary, JointSecretary, Treasurer. Office Bearer committeemeeting should be held twice in a month.


Community Investment Fund (CIF)Committee (Sub Committee)

1. Members from Executive Committee aremembers of CIF Committee.2.With the assistance of BMMU team/BlockLevel Federation, prepare and submit CIF Plansto BMMU.3. Prepare Micro Credit Plan (MCP) for the VO.4. Appraise Micro Credit Plans submitted byGroups and recommend for sanction.5. Monitor the administration of CIF Funds.

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6. Prepare the Utilization certificates and submitthe same to BMMU/DMMU/SMMU.


Finance & Procurement SubCommittee

1. Members from Executive Committee aremember of Finance & Procurement SubCommittee.2. Guide VO in their Procurement functions.3. Ensure that the Procurement guidelineselaborated in the Community OperationalManual are complied with;4. Assist the VOs to negotiate for highest qualityand best Prices.5.Ensure that all financial management andprocurement decisions are documented in theMinutes Books of VO, Finance and Procurementsub-committee meetings6.Guide VO in its financial managementfunctions.7. Ensure that the Financial and accountingGuidelines framed are complied with.8. Facilitate Audit Process.9. Conduct Periodic surprise cash checks.10. Recovery of loan from VLF/SHG members.11. Help in Bank Linkages of eligible SHGs aftercompletion of grading.


Education Committee (SubCommittee)

1. Members from Executive Committee aremember of Education Sub Committee.2. Will promote educational support to VLFmembers families and to the Community.


Health & InsuranceCommittee.(Sub Committee)

1. Members from Executive Committee aremember Health & Insurance Committee..2. Will promote medical assistance, health &hygiene awareness programme to Community.3. Will promote life and assets security tomembers.


Social Audit Committee 1. Members from Executive Committee aremember of Social Audit Committee..2.Carry out Periodic audits (including financial)of VO, Community Producers group handledactivities.3. Certify all milestones certificates and submitregular reports to BMMU.

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1.7 Table: FM Roles of State Office and District for NRLM.

State District.Project Level Community Level

FMManual/Procedures

1. Develop and updatestate FM Manual.2. Develop and updatecommunity level FMManual for state.3. Guide staff at Districtlevel about FMprocedures.

1. Implement state FMManual.2. Guide staff district levelabout FM procedures.

1. Facilitate and monitorimplementation of FMManual for communitylevel.

MOU 1. Sign MOU with MoRD.2. Implement NRLM in thestate as per MOU.

1. Ensure implementationof NRLM in the district asper provision of MOU withNMMU.

1. Sign federation grantagreement with SHGfederations.2. Implement NRLM in thedistrict as per federationsgrants with communityorganizations.3. Monitor adherence toagreement by Communitylevel.

Training on FinancialManagement.

1. Particpate in trainingactivities organized byNMMU.2. Develop State Specifictraining materials.3. Prepare and implementtraining plan fordistrict/sub district level.4. Monitor training needsant district, sub-districtlevel on a regular basis.

1. Participate in trainingactivities organized byNMMU and SMMU.2. Inputs to providingtraining at district, sub-district.

1. Monitor training needsat sub-district/communitylevel on a regular basis.2Inputs to training atcommunity level.3. Develop local leveltraining material, ifrequired.

Planning. 1. Issue guidance forplanning to districts.2. Implement planningsystem at state level.3.Review district plans4. Prepare consolidatedplan for state and submitto NMMU.

1. Prepare and submitdistrict level plans toSMMU.

1. Implement system forfacilitating planning bycommunity organizations.

Budgeting. 1.Issue guidance forbudgeting to districts.2. Scrutinize and approvedistrict budgets.3. Prepare consolidatedbudget at state level andsubmit to NMMU.

1.Prepare and submitdistrict level budget toSMMU (Project level andcommunity level activities)

1. Compile Budget forcommunity level activitiesfor NRLM.

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Flow of funds. 1.Submit request for fundsto NMMU.2. Provide timely andadequate funds for SMMUactivities.3. Implement system offlow of funds todistricts/sub-district levels.4.Monitor of effectivenessof fund flow system ofdistrict/sub-district level.

1. Submit request forfunds to SMMU.2.Provide timely andadequate funds fordistrict/sub-district levelactivities.

Community:1. Implement system offlow of funds for NRLM tocommunity level.2. Monitor effectiveness offunds flow system at sub-district/Community level.

1. Implement system forflow of funds to communityorganizations.

Accounting. 1.Implement accountingsystem for NRLM at stateand district level.2.Consolidation of NRLMaccounts at state level.

1. Accounting of projectfunds at district level.2. Monitor record keepingat Block level.3. Monthly closing ofdistrict level accounts.4. Sendmonthly/quarterly/annualaccounts to SMMU.

1.Implement capacitybuilding activities atcommunity level formaintenance of accounts.2.Implement system ofmonitoring communitylevel accounting andrecord keeping.

Financial Reporting. 1.Implement financialreporting system at statelevel.2.Review financial reportssubmitted by districts/sub-district and prepare statelevel reports.3.Regular and timelysubmission toNMMU/MoRD/WorldBank.

1.Implement financialreporting system at districtlevel.2.Consolidation andpreparation of district levelreports to SMMU.

1.Implement and monitorof system of financialreporting from communityorganizations.

Statutory Audit. 1.Selection of Auditor.2.Ensure timely finalizationof accounts and audit atstate level.3. Timely audit of SMMUand compliance of auditobservations.4. Ensure timelysubmission of audit reportof State to NMMU.5.Review compliance bydistrict/sub-districts.

1.Ensure timely finalizationof accounts and facilitateaudit at district level.

2. Timely and satisfactorycompliance of auditobservation in the district.3. Review compliance bysub-district level.

1.Facilitate and monitorfinancial audit andcommunity level forNRLM.

2. Monitor compliance atcommunity level.3. Ensure that key issuesarising from the audit areaddressed in capacityBuilding and monitoringactivities of NRLM.

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Internal Audit andInternal Controls

Community Levelaudit.

1. Appointment of Internalauditors as per NRLMrequirements.2. Regular internal audit ofSMMU and district/sub-district.3. Monitor compliance bydistricts.4. Submit summary ofreports for each periodand Action taken report toNMMU.

1. Facilitate internal auditat district/sub-district level.2. Monitor compliance bysub-district level.Submit Action taken reportto SMMU.

1. Facilitate and monitorfinancial audit atcommunity level forNRLM.2. Monitor compliance atcommunity level.3. Review of auditobservations.4. Ensure that key issuesarising from the audit areaddressed in capacitybuilding and monitoringactivities of NRLM.

FM Disclosure. 1. FM disclosure at StateLevel.

1. FM disclosure at districtlevel.

1Implement system ofmonitoring disclosure atcommunity level.

FM Monitoring. 1. Regular monitoring ofFM at district/sub-districtlevel.

1. Regular monitoring ofFM at sub-district level.

1. Regular monitoring ofFM at Community level.

1.8 Project Summary:

The State Rural Livelihoods Mission, Assam has been designed to address rural poverty withthe aims to enhance social and economic empowerment of rural poor by creating self managedcommunity institutions of the participating households and enhancing income through promotingsustainable livelihoods. The State Rural Livelihood Mission will be implemented by State RuralLivelihoods Mission Society, Assam which is an independent and autonomous institutionestablished by Government of Assam. The society will have a three tier management structureat state, district and block levels. The Rural Livelihood Mission would be implemented in phasedmanner in all 219 blocks of 27 districts of Assam by the year 2018-2019.

1.9 Project Development Objectives

The Assam State Rural Livelihood Mission Society has been set up with the aim to reducepoverty among rural BPL through building strong grassroots institutions of the poor. ASRLMSwill have multi pronged approach to strengthen livelihoods of the rural poor by promotingwomen SHGs, providing skill development and placement for youth for wage based occupationsin different private/business organizations and imparting self employment oriented trainingthrough banks.

1.10 Objectives:(a) To create enabling pro poor policy environment;(b) To contribute to the lives of the rural poor throughout the state through empowerment andfostering strong self managed grass root institution and support investments by the groups ofthe poor;(c) To bring in convergence among various poverty reduction and empowerment Missions;(d) To evolve strategies and approaches for the empowerment of the poor through socialmobilization and institution building for community participation;

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(e) To build support and service structures for providing social and technical guidance to thepoor in their overall social progress and livelihood development;(f) To undertake all relevant activities, including implementation of specific Missions funded bygovernment, bilateral, multi-lateral and other funding agencies for elimination of poverty, andlivelihoods development of the poor;(g) Establish models for participatory social and economic development of the rural poor inconformity with all these objectives and prove their relevance, sustainability and suitability ofreplication;(h) To strengthen and form producer co-operatives/groups around key commodities, non-farmproducts and services and expanding poor people’s participation in existing commodity co-operatives and producer groups;(i) To organize a forum for show casing and supporting various innovations and experimentationwith new ideas both for social service delivery and livelihoods promotion;(j) To promote Micro Finance Institutions in order to deal with the development of rural poor byway of providing financial assistance and in obtaining commercial funding or by way ofrefinancing under the guidance of state level society with the overall objective of developing themicro finance sector in the State;(k) Support Village Governments in becoming more responsive and effective in delivery ofservices and assisting the rural poor especially women;(l) Such other activities as may be necessary in furtherance of aforesaid objectives

1.11 Guiding principles.

1) Poor have a strong desire to come out of poverty and have innate capabilities to realise thesame.2) Social mobilisation and building strong institutions of the poor are critical for unleashing theinnate capabilities of the poor.3) A dedicated and sensitive support mechanism is required to induce the social mobilisation,institution building and the empowerment process, and facilitating knowledge dissemination,skill building, access to credit, access to marketing and access to other livelihoods serviceswould facilitate the upward mobility of the poor.

1.12 Project Scope:

The project is targeting the POPs of the State with the aim to improve rural livelihoods andenhancement of social economic empowerment of the rural poor through developing theorganizations of the poor. In the first year it is proposed to implement the Programme in phasemanner by covering 42 intensive blocks of the state. Within these Blocks, the beneficiarieswould be the below poverty line people, especially the POP. The project emphasis would be onsocial mobilization, institutional building, financial inclusion, livelihood intervention, capacitybuilding and skill development as a strategy for poverty reduction. The project proposes tointegrate bottom-up participatory development of poorest of the poor and low-incomehouseholds with well coordinated, transparent delivery of public services at the local level.

1.13 Project Components & Sub Components:

Social Mobilization, Institutional Building & Capacity Building:

Formation of the SHGs is the first step in long term institutional building process.Following steps and sequence will be followed in the institutional building process:

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1. Formation of new groups for social inclusion.2. Capacity building of new groups including handholding training.3. Grading of existing SHGs.4. Selection of good SHGs for formation of federations (village organisations).5. Capacity building of weak SHGs for formation of federations (village organisations).6. Identification and revitalisation of defunct groups.7. Formation and development of federations (village organisations and their capacity building).8. Formation of livelihood collectives.9. Formation of cluster/ Gaon Panchayat, block and district federations subsequently

Financial Inclusion.1. Bank accounts will be opened for all the groups formed.2. POP and vulnerable groups will be identified and prioritised for providing bank linkages,3.CIF, skill development and placement services.4. Capital subsidy will be provided to 50% of total SHGs formed in the first year.5. Revolving fund will be provided to 70% of the total SHGs formed in the first year.

Community Investment Fund1. Micro credit to 70% of the total SHGs formed in the first year.2. Healthy Security will be provided to 40% of total SHGs formed in the 1st year3. Food security fund will be provided to 30% of the total SHGs formed in the 1st year4. Education fund will be provided to 50% of the total SHGs formed in the 1st year5. Debt Swapping will be provided to 30% of the total SHGs formed in the 1st year

Skill Development1. Skill Development and Placement of Rural Youth through Project mode for skill linkedplacement of rural youth through partnerships with reputed placement agencies, accreditedagencies, hiring agencies, companies etc2. Self Employment through RSETI model in partnership with Banks – throughentrepreneurship development of local youth to generate in- situ employment throughRUDSETI model .

Livelihood Intervention:1. Livelihood enhancement in both farm and non farm sector- in Infrastructure, Marketing,Training, Technological, Exhibition etc.2. Innovative approaches will be adopted for developing livelihood collectives & producergroups. Infrastructure has been identified for filling up the critical gap required for the growth oflivelihood activities –to manage by collectives.3. In all Intensive blocks agriculture intervention, animal husbandry and non farm sectorinterventions are included in livelihood component.

1.14 Methodology:

The Rural Livelihood Mission would be implemented in phased manner in all 219 blocks of 27districts of Assam by the year 2018-2019.The detail phasing plan for scaling up the program inall 219 blocks of Assam is based on two strategies-

a. Intensive Approach and b. Non Intensive Approach

The blocks that are taken up for implementation of SRLM in the state is ‘intensive blocks’ andremaining blocks are ‘non-intensive blocks’.

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1.15 Intensive Approach:

For the ease of implementation seven intensive districts selected from the seven zones of theState. In 1st phase there will be 7 districts selected from the seven zones. 22 intensive blockshas been selected in those 7 districts. Another 20 blocks, one each from remaining districts hasalso been taken up. The total nos. of intensive blocks in the 1st phased will be 42. Theprogramme will start in these 42 blocks of Assam in the year 2012-13.

1.15.1 Process of selection of Intensive Districts:-

On the basis of socio-economic, agro climatic, cultural and historic factors are taken intoconsideration as per NRLM framework , initially 7 number of zones have been demarcated.

From each zone one district is selected based on comparison within zones on four variablesnamely:HDI- coverage of prosperity and poverty of society% BPL HH- coverage of weaker section of societyNumber of women SHGs- good pre mobilisation status under NRLMArea and population of districts

While selecting the blocks the variables followed are as follows:BPL HHs- coverage of weaker sections societySC HHs/ST HHs-coverage of vulnerable sections of societyNo. of SHGs-Availability of readymade platform of strong SHGs for the project to take offimmediately

On the basis of these variables the 22 blocks(10% as permissible) are selected from 7intensive districts & 20 Blocks( as a special dispensation) are identified by the PDs of concerneddistricts on the basis of Social Capital and poverty available in the Block

In the first year it is proposed to implement the Programme in phase manner by covering 42intensive blocks of the state.

There will be three Phase:-Phase I- 6 Resource Blocks & 12 other intensive blocksPhase II- 12 other intensive blocks -12 BMMUPhase III-12 other intensive blocks-12 BMMU

1.16 Non intensive Approach:

In Assam 177 nos Block will be non intensive blocks in the 1st year.The Non-IntensiveApproach will be as per the existing mode of SGSY under DRDA except that there will be nonew SHG group formation and primacy will be given more to women SHG groups and individualbeneficiaries(IB) preferably belonging to women, sc/st and disabled category. In non-intensiveblocks focus will be on improving quality of the existing mobilization and strengthening linkageswith mainstream institutions

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1.17 Funding and Financing Plan.The Estimated funding for various components and sub-components during the project period ofthe programme is as below:

Budget Summary For 1 Year - 6 Resource Block & 36 Intensive Block &177 Non Intensive BlockS.

No.Base Cost

(INR Lakh)% of

Total CostState Rural Livelihoods Missions1 Office set-up- SMMU,DMMU,BMMU 381.31 1.58

2 Exposure visits of Senior Govt.officials & BankExecutives

30.000.12

3 Partnership with SIRD , NGO etc, Studies,Consultancies,

91.00 0.384 Staff Costs (SMMU and DMMU Only)

a Staff costs including allowances, statutorycontributions, etc.

214.280.89

b Staff trainings and exposure visits 116.85 0.48

5 Rentals for office space, Stationery, Postage,Telephones,Transport, Field Travel, etc.

235.190.97

Sub Total 1,068.62 4.42

6Stake Holder Workshop ( State, Regional, Thematicetc)

170.00 0.70

7Rentals for BMMU office space, Stationery, Postage,Telephones,Transport, Field Travel, etc.

224.40 0.93

8 Block teams costs including salary allowances,statutory contributions, etc.

366.261.51

9 Block teams trainings and exposure visits 109.50 0.4510 Social Mobilization /Resource Block Strategy 4,238.54 17.52

11 Financial Inclusion Pilots/Financial Literacy/E-bookkeeping/Bank Mitra

420.001.74

12 Revolving fund & Capital Subsidy 2,372.95 9.81Sub Total 7,901.65 32.65

13 Health Security , Food Security fund, Educationsecuirity and Debt Swaping fund

1,638.006.77

14 Agricultural,Animal Husbandry & Non farm SectorInterventions

2,880.0011.90

Sub Total 4,518.00 18.67

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15 Hiring of agency for scouting, selecting innovations,organizing IF and Partnerships with Innovators

460.00 1.90

Sub Total 460.00 1.9016.Monitoring and Evaluation & Supervision

Monitoring & Evaluation , Supervision ,BaselineStudies 200.00 0.83

17. eNRLMS (States could wait)Consultancy for MIS design, IT Infrastructure, etc. 100.00 0.41

18 Skill Development And PlacementSkill Development And Placement 1,500.00 6.20

19 RSETI Training cost 486.00 2.0120 Non Intensive Block Budget

Budget for Non Intensive Block (177 Blocks) 7,965.00 32.91

TOTAL COSTS 24,199.278 100

Funding and Financing Pattern.

GOI share ( INR in Crore) 217.79 90State Share (INR in Crore) 24.20 10

Total AAP Budget 241.99

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Chapter 2

Planning & Budgeting

2.1 OBJECTIVES OF THE BUDGETING SYSTEM

The main objective of an efficient budgeting system is to facilitate timely approval of the annualwork plan, draw down of resources from MoRD and Govt of Assam, budgetary control i.e.monitoring of performance at regular intervals and fixing accountability for variances.

2.2 Budget Process:

The function of budgeting shall be carried out by all the accounting centers, i.e., SMMU, DMMU& BMMU.

The proposed budgeting system has been discussed under the following broad heads:(1) Budget period(2) Budget calendar(3) Budget preparation and approval process(4) Approval of Executive committee and Allocation of budget

2.2.1Budget Period:

1. Budget Period to be followed by the Mission Units shall be the financial year i.e. fromApril to March of each year.

2. Budgets shall be prepared for the budget year and broken up into quarterly budgets.This would enable periodical performance review through quarterly variance analysisand preparation of quarterly financial reports.

3. Normally, budgets would be applicable for a full year. However, if the originalassumption made while formulating budgets change of significant variations arise inactual performance or in the environment, it may be necessary to review the budgetsduring the year also.

4. Mid Year Review: At the time of budget preparation for the next year the budget for thecurrent year should also be reviewed. The review should take into account the actualperformance for the nine months and the estimates for the next three months of thecurrent year.

2.2.2 Budget calendar

The process of preparation, review and approval of budget shall normally take around onemonth. The budgeting process for the budget year shall start after the completion of six monthsof the current financial year, thereby leaving six months for budget preparation, review,consolidation, revision, approval and allocation of approved budgets to the various Mission

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Units. The milestones in the budgeting process along with the target dates are laid down in thefollowing budget calendar.

At the State Level:The Mission planning process will follow an “Inverted approach” i.e. it will grow out of Villagelevel plans and get consolidated into Block, District and State level annual work plans. TheAnnual Work plan and Budget will have to be approved by the Governing Body of SRLM,Assam.

Budget Calendar.

AWP for next financial year March-April should be received at MoRD from SMMU by 30st Nov.

Sl Activity Responsible Agency Completion Date1. Approved District Level plan sent by DMMUs to

SMMU.DMMU 15st Oct of

Previous year.2. Preparation of Annual Budget by SMMU for the

Expenditure incurred by it.SMMU 15st Oct of

Previous year.3. Consolidation of Estimates in Budget at State level SMMU 31st Oct of

Previous year.4. Revision of Estimates in Consolidated Budget by

SMMU.SMMU 15 Nov of

Previous year5. Submission and approval of annual budget by

Governing body and submission to MoRD andState Govt (Finance Department)

SMMU/Governing Body. 30th Nov ofPrevious year

6. Allocation of the annual Budget to DMMU/BMMUbased on approval of EC/State Govt.

SMMU After 15 March ofnew Financialyear.

2.3Budget Preparation and Approval Process:

1. As part of the budget preparation the SMMU shall (based on the achievements of theprevious year, progress made up to the Mission period and the annual targets in the overallwork plan, type of requirements emanating from the ground level) prepare an annual action planfor the budget year broadly identifying the focus areas/ activities for the Mission in the budgetyear. This annual action plan shall be prepared in consultation with the Mission offices at districtlevels.

2. The SMMU shall issue instructions to the DMMU for budget preparation and shall specify thefocus areas/ activities identified in the annual action plan for the district. Based on the annualaction plan for each district, DMMU shall in consultation with the Block Mission ManagementUnit (BMMU) prepare a detailed work plan for each district block-wise/ village-wise taking into

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consideration any proposed activities and requirements of the Block level federation, VO/VillageLevel Federations & Producer Organisations and Collectives.

The budget preparation activity shall be co-coordinated by the account section of the concernedaccounting centre at DMMU, BMMU level under the overall supervision of the head of theaccounting centre.

2.3.1 Basis for Budgeting1. The SMMU/DMMUs/BMMUs shall (based on the achievement and actual figures of theprevious years, progress made upto the period and the annual targets in the overall work plan)prepare an annual action plan for the budget year broadly identifying the focus areas/ activitiesfor the mission in the budget year.

The responsibility of preparing AAP lies with the SMMU. AAP shall highlight the focusareas/activities for the mission in the budget year. The AAP shall be prepared in consultationwith the project Units at district & Block level.

2. The Action plan for the first year shall be based on the Overall Work Plan. Revisionscan be made to the annual work plans based on the changed requirements afterQuarterly or half yearly review. The formats of Annual Work plan prepared along with supportingworksheets are provided in Annexure 1.

2.3.2 Preparation of Budgets at Block Level:

The BMMUs will be the nodal point for preparation of budgets at the Block level. As they shallbe in direct contact with the Community Based Organisations, they shall be responsible forassimilating and compiling G.P. wise information as to their needs, future plans both in physicaland financial terms. While preparing the budgets, (with quarterly break-up) the BMMUs shallanalyse the actual Vs budgeted performance of their blocks for the previous year. (However inthe case of first year of project implementation analysis for the actual Vs budget performance forthe previous year shall not be undertaken).

BMMUs shall forward their budgets to the respective DMMU for review, finalization andconsolidation. The BMMUs shall provide explanations, if there are major deviations between thetargets as envisaged upon them by DMMU and the budgets proposed by them.

2.3.3 Preparation of Budgets at District Level

The DMMU shall prepare annual physical (only for measurable activities) and financial budget(with quarterly break-up) for their respective offices after taking into consideration the budgetsproposed by BMMUs. While preparing the budgets, the DMMUs shall analyse the actual Vsbudgeted performance of their offices for the previous year. (However in the case of first year ofproject implementation the analysis for the actual Vs budget performance for the previous yearshall not be undertaken).

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Initially the budget will be reviewed and vetted by the DMMU at the district level and then it shallforward the budget to the SMMU for review, finalization and consolidation. The DMMU shallprovide explanations if there are major deviations between the targets as envisaged upon themby the SMMU and the budgets proposed by them.

2.3.4 Compilation/ Updating of Budget at SMMU Level

1. On receiving the budget from DMMU, SMMU shall verify the budgets to ensure that these arein line with the annual action plan. It shall hold discussions with the DMMU for this purpose.

2. SMMU shall compile the budgets submitted by the DMMU along with its own budget andfinalize the consolidated budget for the Mission as a whole. The Budget may be subjected torevision within prescribed period in case if any discrepancy arises. After that it shall then besubsequently submitted to the MoRD/state government after getting it approved from GB.

2.4 Approval by the Governing Body & Allocation of the Budget

1. After the annual budget has been approved by the Governing Body, the SMMU shall allocatethe budget to BMMUs & DMMUs after setting aside the financial budgets for SMMU office. Thebasis of allocation of physical and financial budgets shall be the budget proposals submitted byvarious BMMUs & DMMUs. Essentially, the process of budget allocation to the Project Unitsshould be completed before the start of the accounting year.

2.5 Budget formatsThe formats of the various budgets prepared along with the supporting Worksheets are placedat Annexure II.

2.6 Budget Variance1. Budget Variance Report shall be prepared every quarter and the reasons for variationanalyzed and documented.

2. All the stake holders from the Districts and the State shall participate in the Budget Analysisand provide explanations wherever necessary. Any variations due to errors inestimation/assumptions shall be taken into consideration during the preparation of next Budget.

3. CFO, FO at SMMU and DPM and BPM shall be responsible for preparation of Budgetvariance analysis in their respective units. CFO/FO at SMMU shall be responsible fordocumentation of explanations and formulation of action plan for corrective measures.

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Chapter-3FINANCE OF THE MISSION.

MoRD will release funds to the state against agreed annual work plan, through direct transferinto State Rural Livelihoods Mission Bank accounts.

The Mission is funded by:-

Government of India. State Govt Share (10% in case of NE States)

3.1 Fund Flow to Intensive Districts:

Fund Flow Process:Govt of India State Govt

(10% Share)

State RuralLivelihoods MissionDeposit into Bank

Account forCommunity

InstitutionDevelopment,

CommunityInvestment Fund,Special Technical& Assistance Fund,

ProjectManagement

DMMU forIntensive Blocks


VillageOrganization

Deposit into BankA/C & manage FoodSecurity and certainCommunityLivelihoods Projects.

SHG SHG SHG SHGDeposit in BankA/c

PD DRDA for SGSYBlocks

BDOBMMU

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3.2 Fund Flow to Non Intensive Districts:

3.3 Transfer of Funds:

3.3.1 Fund Flow of Mission :

Opening of Bank A/c:

State Mission Management Unit, Assam will maintain a separate Bank A/c in a Scheduled Bankfor the Mission fund and notify the same to MoRD. The transfer of funds from MoRD to stateswill be through ECS.

3.3.2 Procedure for release of funds to States:

Govt of India State Share

SMMU

PD DRDA

BMMU forIntensive Blocks

BDO for NonIntensive Blocks


VillageOrganizations

SHG SHG SHG SHG

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NRLM would fund states against appraised and approved annual action plans and stateperspective and implementation plans that outline the results and the processes towardsthese results, and as per FM provisions of MoU which will be signed between MoRD and eachparticipating state.

NMMU would review the performance against these plans half-yearly and annually and fundsflow to the states would be based on the revised annual plans. Funds will be released in twotranches each year through direct transfers into SRLM bank accounts. For all fund releasesfollowing the first tranche, the states will be required to submit audit reports and utilizationcertificates, as per established GoI procedures.

Please refer to Table below for details of conditions for each tranche.

TABLE: Tranche Release to States under NRLM.

Tranche Months Condition of Release.First Tranche April-May 1)Approval of the State Annual Action Plan

and2) Terms and Conditions stipulated from timeto time.

Second Tranche October-December. On the request of SRLM, Assam in prescribedpro-forma and on fulfilment of the followingconditions:1) Utilization of at least 60% of the availablefunds including the opening balance.2) The opening balance of the SRLM shoulsnot exceed 10% of the allocation of theprevious year (in case, the opening balanceexceeds the limit, the Central funds wouldproportionally reduced).3) Audit Reports, Utilization Certificates for theprevious year furnished. Please refer toformat of UC in Annexure III.4)Achievement with reference to AnnualAction Plan; and5) Other terms and conditions stipulated at thetime the previous release should have beenmet.

3.3.3. MoRD to State:- Key Points

1. The State Govt will contribute 10% (in case of NE states) of State Plan for activitiesproposed under NRLM.

2. Funding to states to be based on agreed Annual Work Plan and annual budgetaryallocation.

3. Fund released to ARLMS, Assam will be through direct transfers into ARLMS BankAccount.

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Funding of Mission Offices in the states-Key Points

1. SMMU will incur expenditure for state level activities directly.2. DMMU: SMMU will transfer funds to DMMUs against annual work plan into a separate

Bank A/c opened for the Mission.3. BMMU: SMMU will transfer funds to BMMUs against annual work plan into a separate

Bank A/c opened for the Mission.

3.3.4Transfer of funds SMMU to DMMU:

1. The State Mission Director will open a joint account with Financial Advisor formanagement of the mission fund. The State Mission Director is authorized for makingsanctioning order and payment order from the Mission fund.

2. SMMU would devolve funds to the Districts in accordance with district-wise allotmentsindicated in the Annual Action Plan.

3. To the extent feasible, funds flows SRLMs will not entail physical transfer of funds, andinstead as Electronic Fund Transfer system will be established. Under this system,annual budgetary allocations will be approved by State Mission Management Unit(SMMU) for each Cost centre against specific Budget lines. The Cost Centre willgenerate sanctions and draw down from a Centralized state level Bank account usingthe online Banking systems up to budgetary limits and within the agreed delegation offinancial powers.

4. All funds released by the state to the District and Block level units will be treated as interunit transfers until expenditures are incurred at these levels.

5. These amounts shall be transferred to the Bank Account called “Mission Fund Account”of the DMMU.

6. Initially in the first two years of the Mission, the DMMU will be a lean and flexiblestructure due to less number of Blocks in each district. It is envisaged that SMMU willdirectly interact with the BMMU and greater attention will be given to building thestructures at the Block and village levels where actual interactions with the communitytakes place and District unit will play the role of Coordinator between the SMMU, BMMUand other Mission partners with thin Administrative structure. Depending on the progresshorizontally across villages and livelihood thematic areas and increase in number ofBlocks, district structure will be strengthened. Hence for initial two years funds onlyrelated to district level activities will transferred to the DMMU.

3.3.5 SMMU to BMMU

13. SMMU shall retain part of the funds for activities managed directly by it and pass on theremaining funds on quarterly basis to the BMMU based on the annual budgets submittedby them. These amounts shall be transferred to the Savings Bank Account called“Mission Fund Account” of the BMMU.

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3.3.6 BMMU will received funds from SMMU/DMMU for the following Activities –Community Institutional Development Fund which will include- Formation and Nurturing of SHGs, Producer groups & Federations Training & Capacity Building Salary and Incremental Support to the Block level Offices Establishment Cost and running cost of CBOsCommunity Investment fund which will include – Initial capitalization and Food security Fund, Livelihood & asset fund which includes MCP based livelihood Fund andCommunity Based livelihood Funds. Social services and social action fund which includes Social risk Fund. Skill development Fund which includes Training Funds for Farm & Non Farm andservice Sector.)

3.3.7 BMMU to BLF /CLF/VO/SHG1. About 60% of the Mission fund are earmarked to be given directly to the community throughvillage, cluster & Block Level Organisation .

2. The fund releases are formalized through signing the MOUs & financing agreement (BetweenSMMU, BMMU and BLF, Cluster Level Organization VO & SHG ) specifying mainly releaseconditions and the amount of the instalments.

3.4Expenditure and Payment of Money

1.No officers or authority of the Mission Fund shall incur any expenditure or transfer of moneyfrom the Mission Fund unless such expenditure or transfer of money has been sanctioned by ageneral or special order of the authority competent thereof under the regulations.

2. No expenditure from the Mission Fund shall “be made in excess of the limits specified for thepurpose in the sanctioning order or the budget, as the case may be.

3.Every officers or authority incurring or authorizing or sanctioning any expenditure from theMission Fund shall be guided by the actual financial priority and shall exercise the same cautionin respect of the expenditure which he would have, under the circumstances, exercised had theexpenditure been from his own money and the occasion been for his own benefit.

4.The Mission Fund shall not be utilized for the benefit or any particular person or a particularsection of people unless in accordance with a decree passed by a court of jurisdiction or inpursuance of a policy recognized or accepted by the Mission.

3.5 Sanctioning of Expenditure:

1. All sanction of expenditure shall indicate the details of the provisions under the relevantbudget head. A sanction shall unless specially mentioned by the authority passing the ordercome into effect from the date of its issue.

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2. No authority shall exercise his sanctioning power in respect of the expenditure, in which heeither directly or indirectly has some interest. In such a case the matter shall invariably bereferred to his next higher authority for according the sanction in otherwise.

3.5.1 General principles governing all expenditure to be incurred from the Mission Fund:-

1. That there shall be adequate provision of fund authorized by a competent authority fixing thelimits within which the expenditure shall be incurred.

2. That there shall be proper sanction, either general or special, accorded by the authoritycomponent therefore authorizing the particular item of expenditure.

3. Each head of officer shall be responsible for enforcing the financial order and strict economyat every step and also for observance for all the relevant financial rules regulations anddiscipline.

4. All bills presented for payment shall be examined in accordance with the relevantprovisions of the rules and these regulations and disbursing officer shall if the claim isadmissible and proper, the signature of the claimant is true, the bill is in order and the receipt isa legal acquittance, make an order to pay the bill under his hand seal on the bill. The ordershall specify the amount payable both in words and in figures.

3.6 Linkage of DRDA with DMMU on Financial and Technical matters – Roles of ProjectDirectors.

DMMUs will operate as branches of State Society with close coordination and consultation withDRDAs. It will be a subsidiary unit of the State Society. The DMMU will be responsible forimplementation of mission Programme in the district in close coordination and overall guidanceof DRDA. The DMMUs and DRDAs will maintain linkages in following financial and technicalmatters.

3.6.1 Relationship on Financial and technical matters.

a. DMMU will follow the existing financial and technical rules and regulations beingfollowed by Society.

b. District Project Manager will open an joint account with the Project Director,DRDA for the management of the Society fund.

c. As the mission fund will be placed in a joint account between the Project Director, DRDAand the District Mission Manager, the Project Director will have to keep track of thefinancial flow to the DMMU as well as the expenditure made out of it.

d. It will be the responsibility of the Project Director, DRDA to ensure that the expenditureby DMMU are incurred as per the rules of the Society.

e. The Project Director, DRDA will also ensure that expenditure are made oneligible/permissible items as per plan and budget by the DMMU before putting hissignature for withdrawal from the joint account along with the District Mission Manager.

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f. As the Project Director, DRDA will handle a joint account with District Mission Managerof DMMU it will be the responsibility of the Project Director to supervise the mattersrelating to the maintenance of financial discipline in the office of DMMU.

3.6.2 Review of the progress and performance.

A broad based district advisory group / review and coordination committee will be formedunder the Chairmanship of the Deputy Commissioner. Project Director, DRDA will alsobe a member of the committee wherein review of the performance and progress of theDMMU will be undertaken.

3.6.3 Collaboration for financial inclusion.

DMMUs will also have to establish strong linkages with DRDAs to roll out its effort forfinancial inclusion as there will be many cases to be sorted out jointly at the initial stageat the level of banks and financial institutions for a meaningful financial inclusion.

3.6.4 Reporting.As per implementation framework, SMMU is supposed to establish linkages betweenDRDAs and DMMUs. So it has been proposed that DMMUs while submitting report toSMMU will also send copies of the reports to the Project Director, DRDAs as the ProjectDirectors will have to keep track of the progress and performance before signing forwithdrawal of fund from the joint accounts. Similarly copies of audit reports will have tobe sent by the DMMUs to the Project Directors of DRDAs.

3.6.5 Membership in Bankers Committees.

There are bankers committees at district level wherein the Project Director, DRDA is animportant member. Membership of the District Manager, DMMU should also be ensuredso that the District Manager, DMMU along with the Project Director can coordinate withbankers for various matters relating to financial inclusion.

3.6.6 Fund flow.

SMMU will keep the Project Director, DRDAs informed about the fund flow mechanismand fund released to DMMUs and BMMUs. This will help the Project Directors to keeptrack of the fund flowing into DMMUs and BMMUs as he is a joint signatory with DistrictManager, DMMU.

3.6.7 Finance and Technical Appraisal Committee.

g. A Technical Appraisal Committee will be constituted at district level to technicallyscrutinise the plans and projects prepared by DMMUs and BMMUs. Apart from technicalmembers from Line Departments, technical institutes will be invited.

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h. The Technical Appraisal Committee will give an opportunity to the Project Director to gothrough the plans and projects prepared by BMMUs and DMMU in the light of thedevelopment already taken place in the district so far as SGSY is concerned. ProjectDirector, DRDA will supervise the plans and Project reviewed by this committee as hehas been implementing SGSY and has already created infrastructures and collectives inthe district.

3.7 Finance & Technical Committee of SMMU:

The Finance & Technical Committee in SMMU comprises of following members:

Asst Mission Director Chair Person.Chief Finance Officer MemberState Project Manager MemberDepartmental Heads/Director’s of Concerned LineDepartments/Technical Institutes.

Member.

Experts (may be co-opted as and when required). Member.Sr Financial Advisor, NRLM Member

3.8 Finance & Technical Committee of DMMU.

DMMU PositionDistrict Project Manager Member SecretaryRepresentatives from SMMU MemberDistrict Functional Expert (Of Concerned Discipline) MemberDistrict Heads of various Line Departments/Technical Institutes. Members.Executive Engineer, DRDA Member.FAO, DRDA Member.

3.9 Linkages of the BMMUs with Block Development Administration in financial relatedmatter – Role of BDOs.

3.9.1 Relationship on financial matters.

a. The Block Project Manager will open a joint account with Block Development Officer formanagement of the mission fund.

b. As the mission fund will be placed in joint account between the BDO and the BlockProject Manager, the Block Development Officer will have to keep track of the financialflow to the BMMU as well as the expenditure made out of it.

c. It will be the responsibility of the BDO to ensure that the expenditure by BMMU areincurred as per the financial and technical rules and manuals.

d. The BDO will also ensure that the expenditure are made on eligible and permissibleitems as per plan and budget by the BMMU before putting his signature for withdrawalfrom the joint account along with the Block Project Manager.

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e. It will also be the responsibility of the BDO to supervise the matters relating to themaintenance of financial discipline in the officer of the BMMU.

3.9.2 Review of the progress and performance.

a. There will be a block review and coordination committee to review of the progress andperformance of NRLM at block level.

b. The BDO will be an important member of this committee wherein plan, performance andprogress of BMMU will be reviewed.

3.9.3 Collaboration for financial inclusion.

a. BMMU will also establish strong linkages with block administration for financial inclusionas there will be many issues to be sorted out jointly at the initial stage at the level ofbanks and financial institutions for meaningful financial inclusion.

3.9.4 Reporting.

a. BMMUs while submitting reports to DMMUs & SMMU will also send copies to the BDOsas the BDOs will have to keep track of the progress and performance before signing forwithdrawal of fund from the joint account. Similarly copies of audit reports will also haveto be sent to the BDOs by BMMUs.

3.9.5 Fund flow.

a. DMMU will keep the BDOs informed about the fund released to the BMMUs. This willhelp the BDOs to keep track of the fund flowing into the BMMUs as he is a jointsignatory with the Block Project Managers.

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Chapter 4

Accounting Policies and Frame-work.

4.1 Core System of Accounting:This Chapter describes the accounting and financial procedures that should be followed byvarious accounting center for accounting of program transactions.

The Accounts at various offices/units of the Mission shall be maintained through Accountingpackage in addition to manual entry. All units/offices will also maintain manual Cash Book, BankBook and other Books of Accounts.

4.2 Method & Concepts of Accounting:The Accounts shall be maintained on double entry system adopting cash basis of Accounting.Each transaction must not only be carried out transparently but also be recorded in therespective books of accounts and vouchers/receipts or records stipulated for that purpose.

The accounting aspects in this chapter cover various Mission offices to whom the funds shall bemade available for execution of Mission activities.

The proposed accounting system is discussed under the following broad heads:

I. Accounting centersII. Chart of AccountsIII. Books of Account.IV. Accounting and financial procedures (including formats of books and

records)V. Linkages of financial and physical activities.VI. Day books and ledgersVII.Accounting Entries

4.3 ACCOUNTING CENTRES

The accounting centers are the offices where the basic accounting in respect of expenditure onthe Mission activities shall be carried out. These accounting centers shall be responsible formaintaining the relevant books of account and shall account for all the financial transactionsentered into by each of them.

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The Accounting centers for the Mission shall be as follows:

I. State Mission Management Unit (SMMU): The overall Mission monitoringoffice.

II. District Mission Management Unit (DMMU): The Mission implementation officeat the district level.

III. Block Mission Management Unit(BMMU) : The Mission facilitation office at theblock level.

Community Accounting Centers:I. Block Level Federation / Cluster Level Federation.II. Village Organization/.III. Self Help Group.

For initial two years of the Mission, Accounting at Mission Accounting Centers will be donethrough Accounting Software Package. In addition, all the Books of Accounts of Initial Entries (Cash Book, Vouchers, Cheque issue Register, Fixed Asset Register) shall be maintainedmanually. The Mission will review the existing system after two years regarding implementationof fully Computerized financial Management system at Mission and Community Level.

4.4 Accounting Policies, procedures and systems at State Level:

A common set of “back office’ rules on financial management, including accounting andfinancial rules at the State, SHG Federation and SHG level will apply uniformly across allactivities and all sources of funds, including NRLM.

Project Offices:Accounting system.1. SRLM and its constituent district and block units and SHG Federations will maintain its booksof account on a cash basis following the double entry principle of accounting.2. SMMUs will maintain separate records of NRLM activities. A computerized accountingsystem will be maintained.3. SMMU will prepare consolidated state level accounts for NRLM.

Fund Release:1. Fund Release to Project Offices: All funds released by the state to the district and block levelunits will be treated as inter unit transfers until expenditures are incurred at these levels.2. Fund Release to SHG federations for Community Investment Support: All fund releases toSHG Federations made in accordance with Federation Grant Agreement will be considered aseligible expenditures for the purposes of the project and accounted for as grants (expenditures)in the books of accounts of the SRLM. Such fund releases will be based on achievement ofcertain defined milestones/ triggers. SHG Federation will maintain books of accounts for thereceipts and loans provided to SHGs and will prepare regular financial statements. SHGs will in

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turn, provide loans to their constituent members to fund economic activities to enhancelivelihoods or other consumption needs as described in the SPIP.3. Fund Release to other Institutions: The accounting for fund releases (grant) to otherinstitutions, including Producer Companies, livelihoods federations, NGOs partnership and otherservice providers will be guided by the terms & conditions of respective contractualarrangements or financing agreements/MOUs.

Fiduciary Assurance for Community Investment support:1. The project will obtain fiduciary assurance for the use of Community Investment Supportprovided to the SHG Federations from a combination of the following two processes:(a) Periodic assessment of robustness of the loan portfolio at the Federation level andmonitored through rigorous processes and use of eligibility indicators of profitability, capital andportfolio quality, acceptable levels of loan collections, appropriate capacity for appraisals andsupervision etc.; and(b) Assessment of the fiduciary oversight arrangements established at the Federation level tomonitor and verify the use of funds for intended purposes, including verification mechanisms forassets and other uses of funds, as applicable.9. The project will invest in (a) developing detailed assessment criteria for grading of SHGs andFederations; and (b) providing handholding accounting technical assistance (book keepers,accounting hubs etc.) to the Federations to help maintain accounting records and preparemonthly/annual financial statements for the Loan portfolio.

B. Community Level.1. SHG Federations will maintain books of accounts on cash basis following double entryprinciple of accounting.2.SHG Federations will maintain books of accounts for the receipts and loans provided to SHGsand will prepare regular financial statements.3.The federation annual accounts will be subjected to Statutory audits.

Over the medium and long term, a separate platform will be developed for accounting andfinancial reporting for SHG Federations (and SHGs). This will ensure standardization andconsistency in the quality of accounting. This will also provide online access to financialinformation for community level at the aggregate as well as standalone basis. The accountingsystem at the SHG/federation level will be automated through e-bookkeeping using differentfront-end devices.

4.5 Chart of Accounts

The Chart of Accounts have been developed in a manner to facilitate Accounting for theexpenditures by Project Components, sub-components and main activities and subactivities/Account Head. This will enable comparison of actual expenditures with annual workplan and PIP costs. The detail chart of accounts is given in Annexure IV.

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4.6 Book Keeping and Accounting:

Books of account are the basic records which have to be maintained as part of the accountingsystem. The Books of Account shall be updated and tallied regularly and the balances in thebooks of accounts shall be taken to the Trial Balance. The books of Accounts shall bemaintained in all SMMU,DMMU,BMMU through the Accounting package and in addition to thecomputerized Accounting , manual Accounting will also be done in the books of initial Entry likeCashbook , Bank Book.

There shall be the following principal books of account, records to be maintained atSMMU/DMMU/BMMU.

a)Cash and Bank Bookb) Journal registerc) General Ledgerd)Bank Reconciliation Statement.e)Trial Balance.f) Register of advances.g)Register of Cheques and Bank drafts receivedh) Cheque issue registeri). Register of Cheques and Bank draft dispatchedj) Bill Registerh)Establishment Register like Salary Register, Acquittance Register etc.i)Stock Registerj)Fixed Assets Register

k) Temporary advance Register(i)staff(ii)TA / DA advance

l)File Register

All the Mission Units must update Cash and Bank Books daily for all receipts and transfers fromthe Project fund Account. Cash/Bank collections, Cash/Bank payments and withdrawal/ depositof cash to bank must be accounted in the Cash and Bank Book daily. All receipts,remittances/deposits must be debited in the Cash Book and all payments shall be credited. TheCash Payment Voucher, Bank Payment Voucher, Cash Receipt Voucher, Bank ReceiptVoucher, Transfer Voucher must be the basis of recording transactions in these Books ofAccounts daily. In addition, the SMMU, DMMU & BMMU may, with permission of SMD of theSociety, also maintain petty cash Book to meet the expenses of small amounts and of highfrequency such as payments for stationery, postage, telegrams, carriage, conveyance and otherpetty expenses for which payments may not be made by Cheque but need to be updated daily.

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4.7 Accounting and Financial Procedures at Mission Units.

This section outlines the accounting and financial procedures that shall be followed by variousaccounting centres for accounting project transaction. The fund shall flow to various accountingcentres as per the system of flow of fund described the earlier chapter.

4.8 Accounting at SMMU, DMMU & BMMUThe Proposed Accounting procedures at the SMMU, DMMUs, BMMUs are outlined under thefollowing heads:

I. Receipt Accounting.II. Payment Accounting.III. Bank Reconciliation.IV. Accounting for Contra Entries.V. Accounting of Advances.VI. Accounting of Fixed Assets.VII. Journal Entries.VIII. Correction of Entries.

4.8.1Receipt Accounting:1. The fund shall be made available to the SMMU through electronic fund transfer.2. The DMMU, BMMU shall receive funds from SMMU for project activities as advances. Thefunds shall be received at periodic intervals.3. There could be other receipt on account of interest on bank accounts, receipt of securitydeposits, receipts of earnest money deposits, etc.4. The receipts would generally be in the form of bank receipts. There could be cash receiptsalso, example settlement of advance by an employee in cash etc. Based on the mode ofreceipts, the receipts transaction shall be classified as bank and cash receipts.5. On receipt of funds, a bank /cash receipt voucher shall be prepared. The Bank /cash receiptvouchers shall be allotted a serial number and will be filed sequentially.6. The vouchers after being approved by the competent authority maintaining accounts invarious level shall be posted in cash/bank books.7. In case of receipt of security deposit/ earnest deposits the entry shall be made into theregister of security deposits/earnest money. The register of security deposits/earnest moneyshall contained voucher wise details of the following.i. Opening balance of depositsii. Amount received during the period.iii. Amount refunded during the period.iv. Closing balance of the depositsv. Expected date of refund of deposit.8. The project offices shall periodically review at least once in a month. The register securitydeposit/earnest money deposit to keep track of deposits nearing date of maturity and depositoverdue for payments.

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4.8.2 Payment Accounting

1.The payments shall mainly be in respect of the following:

I. Release of funds by SMMU to DMMUs/BMMUsII. Payments made by DMMU to BMMUIII. Payments made by BMMU to BLF/VLF, Or BMMU to SHGsIV. Other payments both at SMMU, DMMU, BMMUs (such as payment for goods and

services, preparation/procurement of training material/publications, payment foroperational expenses, refund of security deposit/EMD etc.)

The payments would mainly be made through cheques/ DD/ bank transfers. However therecould be cash payments also, e.g. payment of daily wages, repairs and maintenance, etc. Theaccounting for payments shall be done as per the mode of payment i.e. bank payment or cashpayment.

2. All cash / bank payments shall be accounted for through payment voucher.

a).At the time of making the payment, all the details of the payment transaction shall bementioned on the voucher. The bank /cash payment voucher shall be allotted a running serialnumber and will be filed sequentially.

b).In order to avoid preparation of cash payment voucher for petty expenses an advance shallbe given to an administrative official of the office for the purposes of meeting the officeexpenses of a routine nature and small amounts (nature and amount to be specified by thecompetent authority of the project). At regular intervals the official shall submit a statement ofexpenditure incurred classifying the expenses according to the general ledger codeclassifications.

c).After authorization of expenses by the competent authority, a Cash payment voucher shall beprepared to account for the expenses as per the statement of expenditure and the amount shallbe reimbursed to the concerned official.

4.8.3 Accounting of payment to BLF/VLF

a)The payment to BLF shall be made as per the terms of the MOU entered into between DMMUand BLF/VLF for the project activity. Generally, the payment shall be released in achievingmilestones.

4.8.4 Bank Reconciliation Statement.

1) The SMMU, DMMU & BMMU shall reconcile bank balance as per the bank statement and thebank book on a monthly basis and prepare a monthly Bank Reconciliation Statement by 7th ofthe succeeding month. For this purpose, the accounting staff shall match and compare the bank

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statement and bankbook and will generate a list of unmatched transactions. The unmatchedtransactions would be grouped under the following heads:

I. Cheque deposited but not creditedII. Cheque issued but not presentedIII. Excess/ less amount debited / credited by bankIV. Bank interestV. Bank chargesVI. Debits against standing instructions like payment of telephone bills, electricity

bills etc., if any.

2. The project office shall pass appropriate correction entries wherever necessary for thedifferences in the bank statement and bankbook.

a) The Bank reconciliation statement shall be regularly reviewed for cheques issued but notpresented for payment for more than 6 months. These cheques shall be treated as stalecheques. The project offices shall prepare a bank receipt voucher crediting stalecheques account to account for stale cheques. No activity shall be credited at the time ofpassing such entry.

b) A fresh Cheque shall be issued on demand from the party and necessary entry shall bemade in the books of account. The activity shall not be debited / credited on issue offresh cheque. A stale cheque register providing details of the stale cheques shall bemaintained.

c) If a cheque is reversed by the project authorities and no fresh cheque is issued against itfor a period of three years from the date of issue of the original cheque, then the projectauthorities shall debit the activity account and credit the other income account in thebooks of account.

d) In the district units, the District Accounts officer will prepare the Bank ReconciliationStatement (BRS) every month and District Project manager will sign the BRS. In theBlock units, Block Accountant will prepare the BRS and signed by Block ProjectManager.

4.8.5 Accounting for Advances

1. The project offices shall release advances to Suppliers/ Service Providers (as per terms ofthe contract/ Purchase Order/ Rate Contract/ Service Contract). The advance shall be recordedin an Advance register. The advance to staff shall also be recorded in a separate “staffadvance register” that will have a similar format.

2. The advances shall be adjusted on receipt of goods/ services, through journal voucher.

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3)The release of advance shall be done through payment voucher. The adjustment of advancesshall be done through the journal voucher. The expenditure account head shall be charged onlyon posting of journal voucher through which the expenditure shall be recorded. On posting ofthe journal voucher the Journal book and the General Ledger shall be updated regularly.

4)In respect of these advances the main activity and the activity for which the advance has beengiven shall be mentioned on the payment voucher. (This shall facilitate claiming of theseadvances for disbursement from World Bank).

4.8.6 Analysis of Advances

The advances outstanding for the project shall be analysed at the end of each month to monitorthe advances outstanding for long period. An “Age-wise analysis of advances” shall be preparedand the reasons for advances, which have been outstanding for long periods, should beascertained and should be reported by DMMUs to SMMU.

4.8.7 Accounting for fixed assets.

The accounting for fixed assets shall be done in all Mission units offices from State to Blocklevel. Accounting of fixed assets shall be done in respect of assets acquired for the project. Thevarious cost components that shall form part of cost of fixed assets shall be as per theaccounting policy on fixed assets.

Fixed Assets Register

The fixed assets register shall be maintained by all Mission Units including BLF/VLF, producergroups. The procedure of maintenance of the fixed assets register is as follows:

(1)Whenever a fixed asset is purchased a payment voucher shall be prepared whereby therespective account head is debited and bank/ cash account is credited. The relevant asset codeand description is specified in the voucher itself

(2)The fixed asset register shall give details as regards:

(a) The nature of asset(b) Date of purchase(c) Location(d) Cost(e) Asset code(f)Voucher reference of purchase

(3)The fixed asset register shall be updated as soon as the Cash/ bank payment voucher ispassed for purchase of the fixed asset.

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Physical Verification of Fixed Assets

1.The SMMU shall conduct physical verification of the fixed assets (at least half yearly or whenincumbent using the fixed assets is transferred). The procedure for physical verification shall beas under:

2. The SMMU shall generate a list of the assets acquired in the project from the fixed assetregister.

3. The project office shall physically verify the fixed assets at its location with respect to thephysical presence, condition of the asset and its workability (i.e., whether the asset is in runningcondition or not)

4. Any discrepancies or otherwise noticed during the physical verification shall be noted

5. The SMMU shall explain in detail, the reasons for the discrepancies noticed during physicalverification.

6. A certified copy of the fixed asset register shall be sent by each of the DMMU and BMMU.

7. A comparative statement indicating fixed assets as per records and assets as per thephysical verification conducted, variation, if any, and reasons thereof shall be appended with theannual audited statements of accounts.

4.9 Correction of entries

Journal voucher shall be passed with the supporting sheet explaining in detail the reason for thecorrection made, giving reference to the earlier accounting entry. The posting of the vouchershall update the journal book and general ledger.

4.10 Closure of books of accounts at DMMUs/BMMUs1. All BMMUs /DMMUs under this Mission shall close their books of account by 31st March ofthe succeeding financial year on a provisional basis. Adjustments subsequent to provisionalclosure of books shall be made by journal vouchers, which shall update the trial balance. Onfinalisation of accounts the provisional balances will be adjusted accordingly.

2. For the purposes of closure of accounts on a provisional basis, a provisional trial balanceshall be generated and all the ledger accounts shall be taken to the final accounts. A provisionalbalance sheet, income and expenditure account, receipts and payments account and relevantschedules, which shall form part of the annual accounts, shall be prepared.

3.A copy of the provisional accounts so prepared shall be sent to the SMMU for consolidationlatest by April 15 of the succeeding financial year.

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4.11 Closure of books of accounts at SMMU1. The same procedure that is being followed at the DMMU/BMMU shall be followed at theSMMU for account closing purposes.

2. The SMMU shall receive the provisional accounts from DMMUs/BMMUs by April 15 of thesucceeding financial year and it shall generate its own provisional accounts and the provisionalaccounts for the Mission as a whole by April 30.

3.After getting copies of final accounts from the DMMUs, SMMU shall prepare the final accountsfor the Mission as a whole in the manner provided in the consolidation of accounts section ofthis report.

4.12 Book keeping & Accounting at Community Level Accounting Centres.Books of Account at the Community level will be prepared manually. Accounting shall be doneat following levels- SHG Village Organisation Block Level Federation

The Accounting at SHG level shall be done to ensure that savings, Inter loaning among themembers, Utilisation of Funds received from the Mission against CIF and from other sourcesare properly recorded and also to ensure that grant and loan received by the SHGs are properlymanaged and utilised for the purpose it was intended. .SHG shall maintain following books of Accounts – Cash/ Bank Book Minute Book Loan Ledger Savings Ledger Ledgers for Fund received from different sources. Monthly receipt and payment Registers/Sheets. Vouchers. Visitors Register.

The accounting at the offices of the BLF/ Vos shall be done to ensure proper recording ofutilisation of funds received from the Mission and from other sources as per the terms andconditions of the agreement. They shall maintain the following books:

Cash/ Bank Book Minute Book General Ledger Fixed Asset Register Stock Register. Monthly receipt and payment Registers/Sheets. Vouchers.

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CIF Ledger & Other DocumentsApart from above the CBO’s can maintain other registers as per the requirement.

4.13 CIF Accounting

SMMU/DMMU / BMMU shall maintain separate sets of the Registers and documents for thefund released against CIF.

4.13.1 Following Records and Documents has to be maintained at different Accountingcenters for CIF Management-

SMMU would maintain the following Books & documents:1. Administrative Sanction2. District /Block wise Allotment Letters3. Summary Sheet of CIF Allotted4. District/Block wise separate Ledgers for the entire sub Components of CIF with controlAccount.5. Block wise/District wise consolidated Utilization certificates6. Separate Bank Account.7. Audit related file.8. Monthly financial reports of CIF utilization from DMMU.

- DMMUFor each and every CIF, BMMU would maintain the following Books & documents:1. Administrative Sanction2. Block wise Allotment Letters3. Summary Sheet of CIF allotted4. District/Block wise separate Ledgers for the entire sub Components of CIF with controlAccount.5. Block wise consolidated Utilization certificates.6. Separate Bank account7. Audit related file.8. Monthly financial reports of CIF utilization from BMMU.

BMMUFor each and every CIF, BMMU would maintain the following Books of account & documents inprescribed format:1. Administrative Sanction2. Block wise Allotment Letters3. Summary Sheet of CIF allotted4. VO (till BLF is formed) wise separate Ledgers for the entire sub Components of CIF withcontrol Account.5. Separate Bank account6. CIF Proposals from VO/BLF

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7. Appraisal Report8. Memorandum of Understanding/Agreements9. Proceeding10. Utilization certificates from BLF/CLF/VO (till BLF is formed)11. Audit related file.12. Monthly financial reports from Community organizations,13. Management of complaints.

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4.14 TYPES OF CIF TO BE GIVEN TO THE COMMUNITY LEVEL ORGANISATION,(BLF,VLF,SHG)

The Components and definition of the various CIF Sub Components are enumerated below-

Name of the SubComponents

Definition Who will beBeneficiary

Who will give theUtilization

Nature of Fund

1. Livelihood Intervention

1.1 Agriculture Intervention1.1.1MCP based IndividualLivelihood Fund

MCP based financing to SHGmembers for household levelassetisation ,facilitate access toCredit from banks and othersources, fulfill the financingneed for existing agriculturebased livelihood activities,supporting initiatives formitigation of livelihoods risksincluding death due to cropfailure and natural calamity etc,disability and asset replacementinsurance.

SHG members VLF will submit UC toBLF/BMMU (till BLFstarts working) on thebasis of Grant given toSHG members andLoan assets created atVLF based on MCP ofthe Individual SHG

Grant to VLF/BLF,VLF will give loanto SHG . SHG will give it as loan toSHG members. In case initially if BLFis not formed, grant will be giventhrough VO.

1.1.2Community based LivelihoodInvestment Fund

Scaling Up certain keyInterventions in Agriculturelivelihood like- Development ofbackward & Forward Linkages,Agriculture product processing,developing local resourcepersons as para-professionalsfor providing technical support

Group of SHGmembers ofSimilar Activity.Livelihoodcollectives andproducer groups.

VLF/BLF/BMMU (tillBLF starts working) willgive the UC on thebasis of Utilizationcertificate given by theLivelihood collectives/Producer groups

Grant to BLF/VLF. BLF/VLF will giveLoan/Grant to SHG/Livelihoodcollectives/ Producer groups. In caseinitially if BLF is not formed, grant willbe given through VO.

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and to assist the functioning ofthe SHGs, Partnerships withvalue Chain partners ,Assetization at CommunityLevel, skill development,Demonstration on horticulture,multilayer farming, DesigningNew financial Instruments forpoor to enable them toparticipate in extended valueChain.

1.2 Animal Husbandry

1.2.1

MCP based IndividualLivelihood Fund

MCP based financing to SHGmembers for household levelassetisation ,facilitate access toCredit from banks and othersources ,fulfill the financingneed for existing animalhusbandry based livelihoodactivities like Dairying, poultryfarming, pisciculture,goatery, pigbreeding and rearing ,supportinginitiatives for mitigation oflivelihoods risks/failure includingdue to outbreak, Naturalcalamity etc, disability andasset replacement insurance

SHG members VLF will submit UC toBLF/BMMU(till BLFstarts working) on thebasis of Grant given toSHG members andLoan assets created atVO based on MCP ofthe Individual SHG

Grant to VLF/BLF.VLF/BLFwill giveloan to SHG . SHG will give it as loanto SHG members. . In case initially ifBLF is not formed, grant will be giventhrough VO.

1.2.2 Scaling Up certain keyInterventions in Animal

Group of SHGmembers of

VLF/BLF/BMMU(tillBLF starts working) will

Grant to BLF/VO.BLF/VLF will giveLoan/grant to SHG/Livelihood

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Community based LivelihoodInvestment Fund

husbandry livelihood like ,Dairying, poultryfarming,pisciculture, goatery,pigbreeding and rearing,Development of backward &Forward Linkages , developinglocal resource persons as para-professionals for providingtechnical support and to assistthe functioning of the SHGs,Partnerships with value Chainpartners,Skill development,demonstration , Assetization atCommunity Level, DesigningNew financial Instruments forpoor to enable them toparticipate in extended valueChain.

Similar Activity.Livelihoodcollectives andproducer groups

give the UC on thebasis of Utilizationcertificate given by theLivelihood collectives/Producer groups

collectives/ Producer groups. . In caseinitially if BLF is not formed, grant willbe given through VO.

1.3 Non-Farm Sector

1.3.1MCP based IndividualLivelihood Fund

MCP based financing to SHGmembers for household levelAssetization , to develop theirskills on Non farm sector toincrease their existinglivelihoods opportunities,facilitate access to Credit frombanks and other sources ,fulfilthe financing need for existingnon farm based livelihoodActivities ,supporting initiatives

SHG members VLF will submit UC toBLF/BMMU (till BLFstarts working) on thebasis of Grant given toSHG members andLoan assets created atVLF based on MCP ofthe Individual SHG

Grant to VLF/BLF, VLF will give loanto SHG . SHG will give it as loan toSHG members. . In case initially if BLFis not formed, grant will be giventhrough VO.

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for mitigation of livelihoods risksincluding death, disability andasset replacement insurance

1.3.2Community based LivelihoodInvestment Fund

Scaling Up certain keyLivelihood Interventions likehandloom & sericulture,developing their skills on Nonfarm Sector to increase theirexisting livelihoodsopportunities, Development ofbackward & Forward Linkages ,developing local resourcepersons as para-professionalsfor providing technical supportand to assist the functioning ofthe SHGs,Partnerships withvalue Chain partners ,Assetization at CommunityLevel, common facility center,Designing New financialInstruments for poors to enablethem to participate in extendedvalue Chain.

Group of SHGmembers ofSimilar Activity.Livelihoodcollectives andproducer groups

VLF/BLF/BMMU (tillBLF starts working) willgive the UC on thebasis of Utilizationcertificate given by theLivelihood collectives/Producer groups

Grant to BLF/VLF.BLF/VLF will giveLoan/grant to SHG/Livelihoodcollectives/ Producer groups. In caseinitially if BLF is not formed, grant willbe given through VO.

4. Health Security Fund MCP based financing to beextended to members at agreedconcessional rates to addresscritical health risks.

SHG members BMMU*/BLF/VLF (*Tillthe BLF Start working)will give the UC on thebasis of utilization.

Grant to BLF and sub grant toVLF.VLF will grant to SHG. SHG willgive it as loan to SHG members. . Incase initially if BLF is not formed, grantwill be given through VO.

5 Education Security Fund MCP based financing to beextended to members at agreed

SHG members BMMU*/BLF/VO(*Tillthe BLF Start working)

Grant to BLF and sub grant toVLF.VLF will grant to SHG. SHG will

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concessional rates to addresscritical health risks

will give the UC on thebasis of utilization.

give it as loan to SHG members. . Incase initially if BLF is not formed, grantwill be given through VO.

4.3 Food Security Fund MCP based financing extendedto the members at agreedconcessional rates specificallyto address the food requirementof the group members

SHG members

VLF will submit UC toBLF/BMMU (till BLFStarts working) on thebasis of the Fundutilized by the VLF onFood Security

Grant to BLF and sub grant toVLF.VLF will grant to SHG. In caseinitially if BLF is not formed, grant willbe given through VO.

4.4 Debt Swapping Fund MCP based financing to beextended to members at agreedconcessional rates to addresscritical debt . SHG members

BMMU*/BLF/VLF(*Tillthe BLF Start working)will give the UC on thebasis of utilization

Grant to BLF and sub grant to VLF.VLF will grant to SHG. SHG will giveit as loan to SHG members. . In caseinitially if BLF is not formed, grant willbe given through VO.

5. Revolving Fund Initial capital to Enhance thecreditworthiness of the groupsand also to satisfy their initialneeds.

SHG members SHG/VO will submit theUC to BMMU*/BLF(*tillBLF starts working) onbasis of Loan assetscreated at SHG/VObased on MCP of theIndividual SHG.

Grant to SHG from DMMU/BMMUand SHG will give it as loan to SHGmembers. . In case initially if BLF isnot formed, grant will be directly givento SHGs.

6. Capital Subsidy Capital Subsidy will be providedas catalytic capital to the groupsfor building their creditworthiness to take up full rangeof activities.

SHG members SHG/VO will submit theUC to BMMU*/BLF(*tillBLF starts working) onbasis of Loan assetscreated at SHG/VObased on MCP of theIndividual SHG

Grant to BLF which will give furtherGrant to VO. VO will give it as Loan toSHG and SHG will give it as loan toSHG members. In case initially if BLFis not formed, grant will be giventhrough VO.

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Note: Besides above, any other CIF sub-component which is applicable to the respective project may be added.

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CHAPTER - 5

INTERNAL CONTROL

5.1 Need for Internal Controls

Internal Controls are essential to ensure compliance with rules and regulations and applicablelocal laws, authenticity of financial and operational reporting and effectiveness of operations.Various internal controls are evaluated as to the risks associated with Mission financemanagement to ensure utilization of funds from the MoRD and to ensure accuracy andreliability of the books of accounts and financial statements.

Internal controls are integral part of any sound financial management system. It needs to beexercised at various levels to ensure the accuracy and reliability of the financial transactions Itwill ensure proper use of funds for the purpose for which it is provided and protects the assetsof the organisation. The internal control system proposed also detects any arithmeticalmistakes, errors, wrong classification and alarms or cautions any abnormal transactions andvariations in the budget etc, with checks and balances at various levels. The success,efficiency and the effectiveness of the financial management depend to a great extent on the“Quality” of the Internal Controls and the “Financial Discipline” adopted by the organization.

It is recommended that the internal controls should be incorporated in the accounting system(built-in) and adhered to on a routine basis – as a financial discipline to derive the optimumbenefits of the FM system. The following are the select features, which need to be followed asa financial discipline to achieve the objectives of the FMS:

1. Preparation of Bank reconciliation statement on a monthly basis. Reviewing the details of the variations such as reasons for long

outstanding bank credits (cheques deposited not yet credited). It mayreveal that cheques were not deposited in- time.

Long delay in encashment of cheques issued by the project / itsimplementing offices. It may reveals that cheques were not physicallyhanded over in-time/ posted as indicated in the books.

Unusual credits and debits in the bank transactions. Delay or not accounting of bank charges or interest credited by bank

etc, In the district units, the District Accounts officer will prepare the Bank

Reconciliation Statement (BRS) every month and District Project managerwill sign the BRS. In the Block units, Block Accountant will prepare the BRSand signed by Block Project Manager.

2. Preparation of monthly Receipts and Payments statements

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To analyse the utilization of funds provided and raised by theorganization

Preparation of monthly Trail Balance. To ensure accuracy and correctness of the books of accounts

3. Submission of “Requisition Form” for seeking grant To check the requisition for funds after considering the balance available and the

projected expenditure.

4. Monthly Reconciliation of Payments with Expenditures To ensure that proper accounting as all payments are not expenditures.

5. Monthly Review of financial progress against Annual Budget (quarterlytarget) identifying the variance

To ensure that project is progressing as planned and to plug any deviation or totake necessary steps to set right to achieve the target.

6. Monthly analysis of advances – schedule with aging analysis To ensure financial discipline and to avoid any blockage of project funds for a

longer duration.

7. Monthly analysis of statutory payments – deductions and remittances such assales tax and income tax etc,

To ensures that legal and statutory deductions and remittances are made in timeand avoids any legal action or penalty for the delay.

8. Numbering of assets and its periodic physical verification To ensure accountability for the assets provided and to ensure its proper utilization.

9. Monthly review of the various insurance policies etc, such as cash insurance etc,and its periodic renewal.

All assets of the projects and its implementing offices are fully protected / securedin case of any eventuality such as accident/ fire/ theft etc.

10 Quarterly / Monthly monitoring of all Works/contracts/partnership agreementwith respect of time and Cost Over-runs.

It facilitates that all contracts/Works/agreement of are progressing as per the termsof contract/milestones/benchmarks and to alarm slow progress or stagnation inexecution, which enables the Mission to take necessary corrective action for anydeviations or slow progress identified.

11. Obtaining monthly confirmation of cash and bank balances / statement ofaccounts from all the implementing offices.

It provides a check on the accounts personnel to update his books and verify withthe Bank balances and detects errors and mistakes if any.

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12. Monthly monitoring of the procurement limits especially the force account andlocal shopping, etc,

It ensures that project has adhered to the procurement limits and avoids any mis-procurement or ensures control over the procurements.

5.2 Financial DisciplinesApart from the above, if necessary the Society will impose any other financial disciplines toensure quality of the finance and accounting records to generate timely, accurate and reliablefinancial statements:1. Update books on daily basis2. Record transactions legibly3. Providing full and complete description of the Transaction as narration in the “Vouchers”and books of account.4. Providing cross reference such as bill no., invoice no., GRN no., cheque no., purchaseorder no., etc., in the vouchers and books of account and enable audit trial5. Striking Total and balances on daily basis.6. Checking opening and closing balances of cash, bank and other ledgers and accounts7. Surprise Physical verification of cash balance by senior officers.8. Authentication and marking of details of payments on bills and avoiding duplicate payments– stamping of bills immediately after payment9. Preparation of monthly summary of transactions and certification by the Finance officer10. Ensure serial numbering of all type of vouchers – Payment vouchers, Bill Payables,Journal etc,11. Receipt books to be pre-numbered with duplicate / carbon copy retained12. Timely issue of receipt for amount received.13. Timely Deposit of cheques/ Demand Drafts / excess cash into bank preferably on sameday or next day.14. Maintain vouchers and supporting documents of transactions in a separate file15. Maintain consistency in classification of expenditure16. Posting transactions to ledgers/sub ledgers regularly17. Update the latest circulars, orders and implement it without any delay18. Obtain and update the minutes or proceedings of the meetings or committees of itsapprovals for any activities and adhere to its decision.19. Ensure that sundry registers such as Postage registers, telephone registers, logbooks forvehicle, etc., any private use of these need to be recovered from the users.

Internal Audit

SRLM, Assam will engage qualified Chartered Accountant Firm(s) for carrying out internalAudit as per the TOR & Selection Process mentioned in the Chapter - Audit Arrangement ,Part -Internal Audit. The Internal audit will include payment audit as well as independentappraisal of the financial, operational and control activities of the programme.

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Chapter 6

Financial Reporting

6.1 OBJECTIVESThe proposed Financial MIS has been designed with the following main objectives:(1) To provide Mission implementing agencies with relevant information that would enablethem to plan, monitor and control the various Mission activities.(2) To identify and report critical areas of information which are relevant at different levels ofMission implementing agencies and would facilitate in decision making at those levels.(3)To provide a basis for evaluation of various Mission activities by regular comparison ofactual with the budgets(4) To provide a basis for taking remedial actions to correct any adverse trend.(5) To facilitate ‘management by exception’ by presenting critical and select information to thetop management of the program, World Bank and State Governments.(6)To assist consolidation at various levels.

6.2 Reports:

These reports can be devided into two parts:

A. Internal ReportsB. External Reports

6.2.1 Internal Reports:Reports that are generated by the Project, which will assist in preparation of the

External Reports, are Internal Reports.

S.NO TITLE OF REPORT REPORTNO.

PERIODICITY

BY WHEN PREPARED BY SUBMITTEDTO

1 Interim FinancialReport by ProjectComponents-Consolidated &Summary by eachBlock

Monthly 15th of followingmonth

BMMU/DMMU SMMU.

2 Statement of CIFFunds released forwhich UC has not beenreceived.

Quarterly 15th of followingQuarter

BMMU/DMMU SMMU.

3 Executive summary ofinternal audit reportwith actions taken onthe findings

Quarterly 15th of thefollowing Quarter

BMMU/DMMU SMMU.

4. Financial ManagementIndicators

Half Yearly 15th of the endof each periodof 6 Months

BMMU/DMMU SMMU.

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6.3 Reports to be submitted by SMMU to NMMU:

Table: External Reports to be submitted by SMMU to NMMUSl No Report Type Format Periodicity Timeline1. Consolidated IUFR of

StateAnnexure 2 Quarterly Within 30 days

of end of eachquarter.

2. Utilization Certificate. Annexure 4 As and whendue for thetranches as perMoRDguidelines.

As and whendue for thetranches as perMoRDguidelines.

3. Consolidated Audit Reportof State.

Annexure Annually 31st July ofevery Financialyear of previousfinancial year.

4. FM Indicator for states Annexure 3 Six Monthly. Within 30 daysof end of eachperiod of sixmonths.

6.4 IUFR of SMMU: SMMU prepare quarterly IUFR for its expenditure, which will be signed bythe Head of SMMU.

6.4.1 Consolidated IUFR of State:1)SMMU will further prepare one consolidated quarterly IUFR for the entire State which will besigned by the Head of SMMU and send it to NMMU within 30 days of completion of eachquarter.2)The SRLM financial reports will reflect all sources (GOI and State Share) and uses of fundswith detailed statement of NRLM related expenditures.

Table: Description of Consolidated IUFRsIUFRNumber

IUFR Title. Description of IUFRs

2 Source and uses of Funds-States The IUFR provides the followinginformation for state:A. Opening Balances.B. Receipts include:i) Grants received from MoRD.ii)State Shareii)Any other Receipts.C.Uses of Fundsi)NRLP by Components.ii)NRLM (summary only)iii)Other projects (summary only)D.Closing Balancesi) Cash and Bank Balances.ii) Advances.

3A Expenditures against Annual WorkPlans.

Detailed information for state against sub-components for:i)Approved Annual Work Plan.ii)Actual Expenditure Reported:

- For quarter.- Cumulative to date.

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4. Forecast of expenditures for twosix months period ending….and…..

Forecast for next 2 six monthly periods ofexpenditure at state by sub-components.

5. Summary of payments for priorreview contracts.

Summary of payments of prior reviewcontracts for state.

6.4.2 Utilization Certificate: The UC is to be submitted to NMMU for release of funds toState. Please refer to Chapter on Flow of funds for more information on tranches andAnnexure No 4 for format of UC.

6.5 FMIFinancial management indicators is a set of parameters which have been developed tomonitor whether financial arrangements are working satisfactorily or not in SMMU This willcover FM aspects such as staffing , Training , accounting , financial reporting etc .SMMU will submit consolidated Financial Management Indicators on a half yearly basis toNMMU within 30 days of end of each period of 6 months. The detail format of FMI ismentioned in Annexure 3.

6.6 REPORTS FROM VO/BLF TO THE MISSIONBLF/VOs shall prepare a report each month and submit it to BMMU which would indicate:

1. Amount received from BMMU, amount spent on various items and balance in the bankaccount or cash.

2. Fund released to VOs./SHG3. Recovery made against the loan during the month.4. Any funds received from other sources5. Other reports of the CBOs for administration of the funds and activities

Accounting at BMMU would not be based on this statement. BMMU would monitor theregularity of submission of this statement. Upto date submission of these monthly reportswould be required before release of subsequent instalments.

This report would not be used at the Block /District either for accounting or for determining theamount of money to be released to the BLF/ VOs. Its main objective would be to inculcate asense of ownership and responsibility in the VO /BLF for regular updating of accounts.

The BLF/VO shall maintain the books and records to account for the expenditure as per thesystem of accounting prescribed in the contract. The BLF /VO shall submit UtilisationCertificate on monthly basis to the BMMU to facilitate monitoring of the expenses.

Reports that are generated for the purpose of submission to the BMMU are the InternalReports. They are further classified into quarterly and annual reports

Sl No Title of Reports Periodicity By When1. Receipt & Payment Account Monthly By 15th of Next

Month2. Physical & Financial Statement on

CIF releaseMonthly By 15th of Next

Month3. Audited Financial Statements. Annual 30th June of

following year4. Utilization Certificates. As and when required

as per ASRLMSguidelines.

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Chapter-7

AUDIT ARRANGEMENTS

7.1 Statutory Audit7.1.1 Objective of Statutory Audit:The Objective of Statutory Audit would be to provide confirmation to various stakeholders onthe accuracy of project financial statements, compliance with credit agreements and legalobligations and overall effectiveness of financial management system of the NRLM.

Statutory Audit of ASRLMS (SMMU and DMMU) will be conducted by independent CharteredAccountants firms as per terms of reference. A ”Draw down” list of CA firms, based on agreedcriteria, will be made available for the states for procuring their services by NMMU. However,the accounts of the ASRLMS will be open to audit both by C&AG of India as well as by thePrincipal Accounts Office of MoRD. SMMU will submit consolidated annual audit report forstate to NMMU, MoRD.

SHG Federations:i) The SHG Federations/annual accounts will be subjected to Statutory audits as

required by State laws. The ASRLMS will enter into draw down contracts withselect CA firms at State and district levels and agree on fixed price budgets as wellas the audit of ToRs and templates for the annual financial statements.

ii) SHG Federation audit reports will be monitored at the state level and will not beconsidered a part of NRLMs audit requirements.

7.1.2 Submission of Annual Audit Reports:The Consolidated Audit reports of ASRLMS will be submitted to NMMU by 30th July every yearfor previous financial year.The Annual Audit report will consist of:

1) Audit Opinion, confirming whether the Mission financial statements have beenprepared in accordance with consistently applied Accounting Standards and give a trueand fair view of the operations of the Mission during the year and that the withdrawalsmade from MoRD made on the basis of IFRs, procedures and internal controlsinvolved in their preparation, can be relied on to support the related withdrawals.

2) Annual Financial Statements.3) Management Letter highlighting significant issues to be reported to the management.

The Audit report with the management letter will be submitted to NMMU/GOI within 5 monthsof the close of each financial year. TORs for the audit has been prepared and placed inAnnexure 9.

7.1.3 Monitoring of Audit Process by SMMU:SMMU will implement a regular system of review of audit process, including quality of audit atstate level, district level, audit observations and monitoring compliance of the observations byimplementing units.

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7.1.4 List of Accounts to be audited by Auditors

1. Pay & Allowance, Honorarium & Remuneration2. Training/Workshop Programme3. Procurement of materials& Services4. Stock Accounts5. Civil Works6. Outstanding advances & their adjustment7. Hiring of Vehicles & POL A/Cs8. Stamp accounts & imprest A/Cs9. Receipt & Payment, A/Cs, Income & Expenditure A/C and Balance sheet10. Activity wise Budget & Expenditure11. All expenditure vouchers.12.Checking & verification of Bank Reconciliation Statement (BRS

7.2 Statutory Audit Calendar

The following time table is prescribed for the external audit arrangements which should bestrictly followed.

1. Date of GB’s approval for engagement of auditors Between Jan and March ofevery year.

2. Date of engaging CA firm By April of every year at theoutset.

3. Completion of Audit of SMMU. By June of every year.

3. Review and Analysis of State Audit Reports bySMMU and preparation of Summary of AuditReports of Mission.

By June of every year

4. Submission of Consolidated Audit Reports toMoRD/NMMU.

By 31st July of every year.

7.3 Addressing of Statutory Audit Observations/Recommendations

(1) Any adverse comments of the internal auditors need to be looked into and rectifiedimmediately both by the State, District & Block Units.

(2) Any serious comment shall be thoroughly investigated to see if internal controls exist in theareas reported and if internal controls are missing or lacking, sufficient remedial measureshave to be taken immediately to rectify the problem.

(3) In such a case, a critical report shall be submitted by the Auditors to the ExecutiveCommittee of State Society immediately.

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7.4 Settlement of Audit Queries/Objections

(1) The Chief Finance Officer shall be primarily responsible for proper settlement of auditqueries.

(2) The Accounts heads at the respected units shall settle the queries by him or ensure thatthe respective official gives the proper explanation to the auditors to settle the audit queries.

(3) The audit queries shall be settled promptly to the satisfaction of the auditing authorities.The two aspects of the queries shall be attended to by the units audited:-

i. Quantitative Perspective - it is incumbent upon the units to stick to the schedule prescribedby the Finance Specialist who is responsible for prescribing the time limits for the replies.

ii. Qualitative Perspective – unit shall take actions to improve the quality of accounting andcontrols

(5) The audit replies shall ensure:-

i. That all the information desired is provided and the query is addressed in its entirety andCorrective actions are taken/initiated wherever required.

ii. The systems and procedures are tuned and revitalized in such a manner as to ensure thatsuch mistakes/errors are not repeated in future and the losses to the Mission are recoveredfrom the guilty, and the Institutional Capacity Building mechanism is geared up to educate theemployee on the need for better compliance with rules and regulations.

7.5 Internal Audit

The Mission accounts will also be subjected to quarterly internal audit. Firms of charteredaccountants will be engaged by the SMMU to conduct a quarterly audit of the State, District &Block Units and a sample of SHG, VO & BLF and submit management letters to theManagement. The TORs of the Internal Audit task have been drafted and attached atAnnexure 10.The Key Internal Audit Functions are:1) Ascertain whether the systems of internal checks and controls operating are effective.2) Ascertain reliability of Accounting financial reports.3) Ascertain the extent to which the systems in place prevent misuse of project assets.4) Ascertain whether the financial rules and procedures as laid down in the Manuals arefollowed.5)Sample verification of SHG,VO and BLF.

7.6 OBJECTIVES

1.Internal Audit is a control that functions by examining and evaluating the adequacy andeffectiveness of other controls throughout the organisation.

2. The objective of the current internal audit is to seek a professional opinion on the financialposition of the Mission.

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3. The internal auditor should also ensure that funds received and expenditure incurred for theaccounting period are in accordance with the laid down financial regulations, procurementprocedures and other orders issued from time to time and that proper accounts are maintainedat all levels.

4.The internal auditors has to visit the Community based Organisations i.e. Block Level,Village Level federations, SHGs, Producer Organisations/Collectives and express their opinionon the functioning of Financial Management System, Funds Flow Mechanism etc. on aquarterly basis. They also provide on the job support to such organisations and givesuggestions for further improvement in different aspects by taking into consideration the fieldlevel realities.

5) The Internal Auditors shall prepare quarterly reports and an annual audit reports.

6) The Internal Audit report shall contain results of a 100% check of the accounts.

7) The Internal Audit shall review project financial management systems and adherence toGovernment orders, office orders, instructions issued by the State Society, adequacy ofinternal controls.

8) The Audit shall check the effectiveness of the overall financial management arrangementsof the Mission at all levels.

9) It shall provide necessary support to the Project Management with timely information on thefollowing:

a) Accounting and financial management aspects of the Mission.b) Adequacy of internal controls.c) Compliance with the various financial arrangements.d) It shall provide data for corrective and follow up measures.

7.7 The Key Internal Audit functions are:1) Ascertain whether the systems of Internal Checks and controls are effective.2) Ascertain reliability of Accounting financial reports.3) Ascertain the extent to which the systems in place prevent misuse of project assets.4) Ascertain whether the financial rules and procedures as laid down in the Manuals arefollowed.5) Sample verification of SHG,VO & BLF.

7.8 Addressing of Internal Audit Observations/Recommendations:

1) Any adverse comments of the Internal auditors need to be looked into and rectifiedimmediately by both the State, District and Block Units.

2) Any serious comment shall be thoroughly investigated to see if internal controls exist inthe areas reported and if the internal controls are missing or lacking, sufficient remedialmeasures have to be taken immediately.

3) In such a case, a critical report shall be submitted by the auditors to the ExecutiveCommittee of State Society immediately.

7.9 Monitoring of Internal Audit Process by SMMU:4) SMMU will implement a regular system of review of Internal audit process, including

quality of audit (at state level, district level, Blocks and Community level), auditobservations and monitoring compliance of the observations by implementing units.

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7.10 Coverage and Standards for the Audit

The audit would cover the entire Mission i.e., covering the implementing units at the Missionlevel (SMMU, DMMU and BMMU) and the Village Institutions (SHG, VO, CLF and BLF) ona sample basis the audit would also cover all consultancies or other contracts that may beentered into by the implementing agencies. The internal audit should be carried out inaccordance with the Auditing & Assurance Standards prescribed by the Institute of CharteredAccountants of India and will include such tests and controls, as the auditor considersnecessary under the circumstances. Specific areas of coverage of the audit will include thefollowing:

7.11 List of Books of Accounts/Records to be audited by Auditors (Internal)

(A) District Office/Block Office

1. Cash Book2. General Ledger3. Advance Ledger4. Bill Register5. Acquinttance Roll6. Cheque issue Register7. Assets Register8. Govt. Deduction Register9. Training/Workshop Programme Register10. History of Vehicle & Logbook.11. Stock Register12. Fund receipt Register.13. Fund Issue Register.14. Audit Objection Register.15. Honorarium register.

7.12 Management Letter

In addition to the audit report on the Mission financial statements, the auditor may prepare amanagement letter containing recommendations for improvements in internal control and othermatters coming to the attention of the auditor during the audit examination, possibly includingmatters such as the following:

a. observations on maintenance of the accounting records, systems, and controlsthat were examined during the course of the audit.

b. deficiencies or weakness in systems and controls, together with specificrecommendations for improvement

c. compliance with financial covenants in the financing agreements

d. matters that might have a significant impact on the implementation of the Mission

e. the status of recommendations from previous management letters, including anyissues which remain to be addressed and any issues which recurred

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f. any other matters that the auditor considers pertinent.

The auditor should supply the Bank with a copy of the management letter together with theaudit report on the Mission financial statements. In the event that no management letter isissued, the auditor should supply a written advice to that effect together with the audit reporton the Mission financial statements.

7.13 Audit by the Comptroller and Auditor General of India

The accounts of the Society shall also be subject to the provisions of comptroller and AuditorGeneral of India (Duties, Powers and Conditions of Service) Act. 1971 as amended from timeto time.

7.14 Submission of the Audited Accounts:

On receipt of the audit reports, the Mission Director shall submit the same to the Chairman ofEC and the Chairman shall thereupon place the audit reports before the GB for approval.

The Mission shall, after taking such action as it may deem fit and proper up to the audit report,audit objections and audit observation or recommendation etc., shall submit two copies of theaudited accounts Mission along with the audit report and observation etc. to the State Govt.with a request to transmit the other copy thereof along with the comments, if any, of the StateGovt. to the Central Govt.

7.15 Social Audit:The Social Audit functions carried out by the Social Audit Committee will also include financialreviews and audits on all aspects of quality, quantity and procurement etc.The Social Audit will be performed by :-(i) Different stakeholders including Social Audit Committee of BLF/VLF.(ii) By Community comprising members of SHGs, Federations, BPL families etc.

Linkages of Social Audit and Internal Audit.The output of Social Audit performed by Social Audit Committee will be input to Internal Auditand the output of internal audit performed will be input to input to Social audit.Activities to be covered under Social Audit process :

1. Raising awareness of rights, entitlements and obligations under the project.2. Specifically , about the right to participate in a Social Audit.3. Ensuring that all forms and documents are user friendly.4. Ensuring all relevant information is accessible, displayed and read out.5. Ensuring that the decision making process is transparent, participatory and as far as

possible , carried out in the presence of the affected persons.6. Ensuring that all decisions, and their rationale are made as soon as they are made.7. Frequent meeting/ interaction among implementing units, service providers, federations

and Self Help Groups.8. Ensuring that the findings of social audits are immediately acted upon.9. Also ensuring that these findings result in the required systematic changes.

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7.15.1Steps in Social Audit:

1. Identify the various stages of NRLM2. Identification of the vulnerabilities in each stage: Vulnerabilities will be identified in

terms of what can go wrong, what can be corrected, what distortions can occure andwhat biases creep in.(An analysis has been explained below)

3. Identify for each stage appropriate measures to be taken to ensure that the identifiedvulnerabilities are addressed through relevant Social Audit mechanism.

4. Identify the professionals and institutions that will be responsible for ensuring that theSocial Audit is organized properly.

5. Call a meeting of the group, federation and other stakeholders to discuss about theprinciples and methods of Social Audit

6. Public hearing of affected persons7. Follow- up actions on Social Audit.

7.15.2 Survey Method under Social Audit:

Different methods can be chosen for Social Audit so as to capture both quantitative andqualitative information of the Self Help Group, Federation and other Stakeholders.

Different Methods:

Postal survey: This method of survey is relatively less expensive and found to be moreuseful when same instrument can be sent to a large number of SHGs and federations.

Group administered questionnaire:Under this method, a sample of respondent , number of SHGs and Federations is broughttogether and asked to respond to a structural sequence of questions. This method is idealfor collecting information from the groups who join for village meetings and it is relativelyeasy to assemble the group in a village setting. This method offers a higher response rateand if the respondents are unclear about the meaning of a question they could ask forclarifications.

Household drop-off :In this approach, the Social Auditor goes to the houses of the members. This method is

expected to increase the percentage of respondents. However, the applicability of thismethod is geographically limited, slow and expensive. Personal interviews with the members of SHGs, federations and the stakeholders:

Interviews are a far more personal form of research han questionnaires and is very usefulin finding qualitative remarks. This method helps to learn more about the situation in detail,to discuss issues that would be difficult to address in group situations and to reveal theirpersonal perspectives on a particular topic.

Interview with key formats from SHGs, Federations and other stakeholders: Theinformation collectrion should be at random, covering representatives from SHGs,Federations etc., who can view point with special knowledge so as to gain insights intoparticular subjects.

Group interview with representatives of SHGs and Federations: This method ofinformation collection allows a focused discussion on particular issues concerning thecommunity. This method requires less resources compared to personal interviews

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Telephonic interview with SHGs, Federation and other stakeholders: Telephoneinterviews enables the Social Auditor to gather information rapidly. Like personalinterviews, they help to develop some personal contact between the interviewer and therespondent and this method offers the possibility of probing into details.

Semi Structured interview : Semi structured interview will also be used for listening tothe perspective of different stakeholders including members of Self Help Groups andfederations.

In depth interview: In deft interview will also be conducted with SHG members,representatives of federations and other stakeholders. In deft interviewing involves askingquestions, listening to the answers and then posing additional questions to clarify orexpand on a particular issue.

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Stage Vulnerabilities Steps to ensure transparency and Social Audit

SocialInclusion

Exclusion due to remote place, badconnectivity, poor access etc.

Lack of access to mission units, CommunityService Providers

Physical segregation of primitive tribalgroups and lack of access to the services.

Exclusion of disadvantaged, marginalizedsections.

Exclusion of disabled and physically ,mentally challenged people of the poorestof the poor category

Social exclusion of women because ofsocial and familial proscription.

Social Exclusion due to domesticresponsibilities

Exclusion due to migration

Self exclusion for various reasons

Wide publicity and sensitization Selection of Beneficiaries: Effective targetting is a

key way to ensure inclusion. Some approaches for effective targeting used by

various projects are :-Spatial or geographical targeting

-Social group targeting

-Economic or occupation targeting

-A focus on women

Targeting areas using human developmentindicators.

Areas with poor infrastructure development Areas prone to disasters. Conflict- prone zones Innovative Approaches to include Remote areas.

Participatory identification of poor.

Landless Labourers. Other occupational vulnerabilities

Focusing on Social Groups and Women: Dalits and Adivasis Women Socially invisible groups.

Building institutions of and for the poor: Self Help Groups Homogeneous Groups

InstitutionBuilding

Exclusion from the groups because ofrigidity in the norms of the groups-particularly in case of vulnerable sections.

Dropout due to domestic responsibility,social inhibition, familial proscription.

Membership criteria may be tilted fordominant groups.

Norms and functioning of the institutionsmay not be friendly to the poorest of thepoor.

Wide publicity and sensitization on the norms ofinstitution building

Proper analysis of the people and the community. Rapport building with each and every community and

their leaders. Involvement of formal and informal leaders to

motivate women to join the Self Help Groupmovement.

Make them understand the importance and benefitsof joining the Self Help Groups.

Involve the excluded women in finding out andanalyzing root causes of community problems.

A close relationship with each family and community

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The influence of external forces can lead toexclusion of the poorest of the poor fromthe groups.

Leadership styles may exclude poorest ofthe poor.

The project may focus on women but failedto address gender

Membership norms, style of functioning –not pro-poor

by day to day contact. Informal sharing of development concerns and

problems. Proving useful to the community with sound

knowledge of the project Building rapport with the community Demonstration of concerns for the people’s cause

without bias of any kind to any member in thecommunity.

Dialogue with village formal leaders , local officials,teachers, respected leaders in different communitiesand caste groups.

Initiating development process with such activitieswhich can show quick results and establishcredibility.

Listening to everybody and then making decision.

FinancialInclusion

Constraints in accessing bank services-poor physical access, affordability andsocial distance, including discriminatingattitude

Low quality of services and hightransaction costs, in accessing bankservices in case of socially marginalizedsection.

Procedure for opening accounts and loanare complicated and time consuming.

Formal credit institutions are viewed asinaccessible and unfriendly by the poor.

Collateral and security requirements forloans.

Poor often do not have clear title to land.

Opening of accounts, harrowing experience

Inadequacy of loan, rigidity of terms andlack of timeliness.

Interface between rural poor and the bankers Financial literacy/ councelling services on savings/

credit Engagement of bank mitras, business facilitators,

bank correspondents etc. Hand holding support to the SHG for financial

inclusion Frequent interaction between bank linkage sub-

committees of federations with bankers. Frequent interaction between project units and bank

officials Transparency in credit disburstment

LivelihoodDevelopment

Improper identification of activities

Choice and type of livelihoods activitiesalienate the poor in the groups.

Improper preparation of micro credit plan.

Lack of participatory selection of activitiesand members for loan

Participatory identification of income generatingactivities

Training on selection of activities for livelihoods andselection of micro credit plan.

Convergence of support services Hand holding support for marketing Field level technical and managerial guidance Frequent monitoring on availability of support

services for the growth of income generating

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Lack of understanding the vulnerabilities ofthe poorest.

Inadequate access to land and otherresources.

Poor infrastructure and marketing support

Skewed delivery of services.

Lack of access to credit

Lack of skill and managerial capacity

activities.

Accesstoinstitutions/projectunits

Accessibility to the project units and otherinstitutions and office may not be adequateor easy due to following reasons:-

Poor availability of services. Poor affordability of services. Social access. Poor targeting. Poor quality of services Poor infrastructure maintenance

and supply. Poor capacities of staff. Poor governance and

accountability. Poor supervision and monitoring. Complex and time consuming

procedure. Lack of mechanism for citizen

feedback. Discrimination. Elite capture.

The SMMU, DMMU and BMMUs includingcommunity service providers adhere to the values/norms / principles.

Well-being of the people Transparency Participatory approach Equity Inclusiveness Responsiveness Concensus Efficiency Accountability Quality of performance Statutory and procedural standards Timely service delivery Timely redressal of grievances.

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Chapter 8Financial Management Disclosure

This Chapter summarises Financial Management aspects of the Framework of NRLM.

8.1 Disclosure Management Framework:NRLM will have a framework for disclosing key information about Mission performance onMission Websites to demonstrate transparency and accountability towards stakeholders andgeneral public. Disclosure Management framework of the NRLM will be followed by all levelsof the Mission units to which the framework is applicable.

8.2 Scope:SMMU and DMMUs will be responsible for ensuring adherence to disclosure of managementpolicy of NRLM. The Mission progress in all areas, including financial progress, will be madeavailable to the public through Mission website.

Summarise form of financial management information which should be displayed on theWebsite of Mission at State/District level progress is mentioned in the Table below:

8.2.1 Table: Financial Management Disclosure for NRLM.

Sl No Document Frequency Deadline1 Financial Management Manual (FMM) of the State. Start of Mission.2. I. Circular issued by SMMU regarding FM issues.

II. Any Amendments to FMM of State.As and Whenissued.

3. I.FM Guidelines.II. FM Training material and other information aboutFM Training.

As and WhenIssued.

4 Annual Approved Estimates for Mission in theState:

a) Original Estimates.

b) Revised Estimates.

Annual.

Annual.

30 April.

As and Whenrevised.

5. Fund Releases to SMMU

a)By MoRDb)By State Government.

As and when. Within 5 days ofreceipt of funds.

6. Fund Release by SMMU to

a) Districtsb) Other Implementing Agencies.

Quarterly. Within 5 Days ofrelease.

7. Consolidated IUFR for the State. Quarterly. Within 45 days of

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end of each quarter.8. Annual Statutory Audit Report for the State. Annual. Within 15 days of

submission of AuditReport to NMMU.

9. FM Indicators Summary for State (SMMU andDistricts)

Six Monthly. 15 November and15 May.

DISTRICT MISSION MANAGEMENT UNITSSl No Document Frequency Deadline1. Annual Budget. Annual 30th April2. Funds Received by District

a)From SMMUAs and When Within 10 days of

receipt of funds.3. Release by Districts to Community

Organizations.Within 5 days ofrelease.

4. Quarterly IUFR Quarterly. Within 45 days of endof each quarter.

5. FM Indicators Summary for Districts. Six-Monthly. 15 November and 15May.

8.3 Monitoring of FM Disclosure.SMMU is responsible for Monitoring disclosure of FM information by DMMUs.

8.4 Key Aspects to be Monitored:An indicative list of aspects of FM disclosure which should be monitored by SMMU ismentioned below:

8.4.1 Adherence to FrameworkProviding information as per requirements of the Framework.

8.4.2 TimelinessAdhering to frequency and deadlines of information to be displayed as per the framework.

8.4.3 Completeness:a) Information is disclosed for All FM areas covered in the framework e.g. Budget, Flow

of funds, audit etc.

Disclosure ManagementFramework of NRLM Timeliness

Completeness Accuracy.

Monitoring ofFM Disclosure.

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b) For each individual area (e.g. Budget), complete information as per agreed format isdisplayed.

8.4.4 Accuracy.Accurate information is displayed in website as per Mission records.

8.5 Financial Management Disclosure in Public domain in SMMU,DMMU and BMMUOffices:

8.5.1 Financial Management Disclosure in SMMU Office in Public DomainThe SMMU should disclosed the following statements in Public Domain in signboardsapart from disclosing it in Mission websites.1. Annual approved estimates for the statea) Original estimatesb) Revised estimates2. Fund released to SMMU from a) MoRD b) By state government3. Fund released to a) Districts b) Other implementing units4. Statement of CIF funds released to district and utilization.5. Statement of utilization of funds in various components like Community Institutional

Development, CIF, Skill Development and Placements yearly against budgetallotment.

8.5.2 Financial Management Disclosure in DMMU Offices in Public DomainThe DMMUs should disclosed the following statements in Public Domain in signboardsapart from disclosing it in Mission websites.

1.Funds received by districts.2.Funds released by districts to BMMU, Community Organizations3.Statement of CIF funds released and utilized in districts4.Annual Approved Estimate of the districts5.Funds utilized in various components like Community Institutional Development, CIF,Skill Development and Placements yearly against budget allotment.

8.5.3 Financial Management Disclosure in BMMU Offices in Public Domain.

1.Funds received by Blocks.2.Funds released by districts to BMMU, Community Organizations3.Statement of CIF funds released and utilized in Blocks4.Funds utilized in various components like Community Institutional Development, CIF,Skill Development and Placements yearly in the Blocks against allotment made.

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Chapter - 8Staffing & Training

8.1 Staffing

The staffing of the finance and accounts professional for the Mission will be as per theHuman Resource Manual for taking care of overall responsibility for all financial andaccounting aspects. The ASRLMS, SMMU would have a Chief Financial Officer who would behaving experience of minimum ten years in the rank of FAO or senior grade position inaccounts from govt. department/ govt. organisations/training institute or equivalence in thecadre of AFS. In case if not from government and hired from open market the CFO shouldhave Post Graduate degree in Commerce/Management/ICWAI/CA with overall upperhierarchical managerial experience of over 10 years in rural development sector projectfunded by World Bank or Central Govt or have experience in PSUs.

The CFO in the ASRLMS, SMMU with overall responsibility for all financial and accountingaspect of the project, including interaction with the DMMUs and BMMUs. The CFO would beresponsible for development updating and operations of the project financing accountingsystem, financial planning, financial forecasting etc. He will be responsible for both fiduciarygovernance of the mission funds as well introduction of based business process to ensuretimeliness of fund flow to various key implementing units, community organization. TheFinance Officer will assist CFO in relation to fiduciary governance of the mission funds he willalso coordinate with CFO to oversee the financial and accounting arrangement in the variousproject implementing unit.

The SMMU,DMMUs and BMMU would have appropriate numbers of Accounts Officers,Account Assistant to carry out the various routine activities under the direction and supervisionof CFO. The Finance and Account Staff needs to be quickly familiar and trained on the projectand the financial management system. All the Project Managers and other staffs also needs tobe sensitize on the important of financial management aspects for effective projectmanagement.

8.2 Qualification and roles and responsibility of Finance and Accounts Personnel:The personnel at various institutional levels of the project directly performing the financialmanagement function are summarized in table below.

Position Qualification Key Roles & ResponsibilityFinancialAdvisor

On deputation from govt. department/govt.organisation/training institute or equivalents in the cadreof AFS. Preferably having experience in the rank ofSenior Financial Advisor or Senior Grade Position inFinance & Accounts.

1)To assist State Society in the dischargeoffice responsibilities:-(i)For the financial regularity of thetransaction under Budget in the respect ofwhich SMD functions as a controllingofficer.(ii)For the maintenance of the accounts oftransaction correctly and in the formprescribed under rules and orders in

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force.2) The functions of the Financial Advisorare two folds:-i) As Advisor to the State Society in allmatter relating to budget estimates,budget control, budget variance and to theoperation of the financial rules of the StateSociety.ii) Exercising supervision over the regularand correct compilation of all the accountsthat are required to be compiled andmaintained in the State Society.3)The Finance Advisor should be wellconversant with all the sanctions andorders passing through the office of theState Society and with order proceedingsof the State Society.4)He should advised SMD on the financialeffect of all the proposals for expenditureand keep watch as per as possible overall the liabilities as they are incurredagainst the grants.5) The Finance Advisor is responsible forthe arrangement for compilation of correctaccounts, consolidated audit report,Interim financial reports which are to besubmitted by SMD to higher authorities.6) He should scrutinise over all mattersrelating to appropriation accounts anddisposal of audit objections.7) The Finance Advisor will exerciseoverall supervision over the AccountingCentres and inspect the AccountingCentres to oversee whether theAccounting and Financial Procedures arecomplied.

ChiefFinancialOfficer

Chief Financial Officer would be having experience ofminimum ten years in the rank of FAO or senior gradeposition in accounts from governmentdepartment/government organisations/training instituteor equivalence in the cadre of AFS. In case if not fromgovernment and hired from open market the CFO shouldhave P.G. Degree Commerce/Management/ICWAI/CAwith overall upper hierarchical managerial experience ofover 10 years in rural development sector project fundedby World Bank or Central Govt or have experience inPSUs.

The CFO will have overall responsibilityfor all the financial and accountingaspects of the mission and provideleadership and strategic direction on thefinancial aspects, including developmentof financial capability in all theimplementing agencies at the districtblock and community institutions he willoversee the finance and accountingfunctions of all units, budgetary control,monitoring and control of financialmanagement system, internal controlfunctions at the state, district and blocklevel. The procurement arrangements inthe various project implementing units willbe overseen by him.Some of the core functions to beperformed by CFO will be:-1. Compile annual budget of missionbased on AAP for SMMU,DMMU andBMMU and submit same to the MoRD forsanction of the budget.2. Distribute funds to DMMU and BMMUs

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on time basis as per agreed annualworked plans.3.Institute mechanism for properaccounting and auditing of Mission fundsat state, district, block and village level.4. Maintain database on district/blockwise, component wise fund releases andexpenditure.5. Compile and forward regularquarterly/annual financial reports to Govt.of Assam, Govt. of India.6.Submit regular claims forreimbursement of Mission expenses7. Develop policy and strategy for bookkeeping capacity building at block &village level and implement the same.8. Review financial progress at District &Block level.9. Liaise with statutory auditors for theaudit on an annual basis and place theaudited accounts before SMD of statesociety and filing of returns with Regularof Societies.10. Effective Liason with consultantsengaged to work on Finance andaccounts aspects.11.Ensure that the internal audit system isworking as per schedule and follow up ofissues arising out of internal audit.

FinanceOfficer

MBA Finance with 2 to 3 years’ experience in ruraldevelopment sector project funded by World Bank orCentral Govt. or have experience in PSUs.

The Finance Officer will assist the CFO inrelation to fiduciary governance of themission fund and coordinate with CFOoversee the finance and accountingfunction of all units, budgetary control,monitoring and control of financialmanagement system, internal controlfunctions at the state, district and blocklevelSome of the core functions to beperformed by FO will be:-1. Assist in compilation of annual budgetof mission based on AAP for SMMU,DMMU and BMMU and submit same tothe MoRD for sanction of the budget.2. Assist in distribution of funds to DMMUand BMMUs on time basis as per agreedannual worked plans.3. Institute mechanism for properaccounting and auditing of Mission fundsat state, district, block and village level.4. Maintain database on district/blockwise, component wise fund releases andexpenditure.5. Compile and forward regularquarterly/annual financial reports to Govt.of Assam, Govt. of India.6. Submit regular claims forreimbursement of Mission expenses.7. Develop policy and strategy for book

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keeping capacity building at block &village level and implement the same.8.Review financial progress at District &Block level.9. Assist to liaise with statutory auditorsand internal auditors for the audit on anannual and regular basis.10. Preparing schedule and impartingfinancial training to staff members ofvarious key implementing units.11. He will be responsible for managingCIF flow in accordance with system laiddown and supervise that proper recordsare maintained at different accountingcentres for CIF management.12. He will be responsible for advisingvarious accounting centres in followingprudent and financial norms and ensuringfiduciary discipline at accounting centres13.Quarterly Review of financial progressagainst Annual Budget (quarterly target)identifying the variance to ensure thatproject is progressing as planned and toplug any deviation or to take necessarysteps to set right to achieve the target.14.Monthly Review of financial progressagainst Annual Budget(quarterly target)identifying the variance to ensure thatproject is progressing as planned and toplug any deviation or to take necessarysteps to set right to achieve the target.

AccountsOfficer(SMMU)

P.G. Degree in Commerce/CA/ICWA with 2 to 3 years’experience in managerial level in rural developmentsector project funded by world bank/Govt. of India orhaving experience in public sector undertakings.

1. Will be responsible for performing allfinance and accounting functions at theSMMU level of State society.Some of the core functions to beperformed by Accounts Officer are:-a.Maintaining proper books of accountsand consolidating accountsb.Compilation of accounts in state levelc. Preparing interim financial statementsto be submitted to MoRD/NMMU.d.Ensure timely and up-to-date upkeep ofaccounts regularly.e. Maintaining Accounting and FinancialProcedures at Mission Units.f. Maintaining and compiling records ofCIF from different accounting centres.g. Incorporating internal controls inaccounting system at various levels.h. Preparing stock statement andupdating Fixed Assets Register afterproper physical verification at periodicintervals. .i. Assisting external and internal auditteam in audit related matters,j. Monthly analysis of advances andensure its proper accounting.k. Quarterly Reconciliation of Payments

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with Expenditures to ensure properaccounting.l. Monthly analysis of statutory payments-deductions and remittances such as salestax, income tax , EPF etc. to ensure thatlegal and statutory deductions andremittances are made in time.

AccountsAssistant(SMMU)

Minimum BCom, with knowledge in computer applicationand Tally latest version. Candidate having priorexperience will be preferred.

The Accounts Assistant will assistFinance and Account team and will beresponsible for performing all finance andaccounting functions at State level as perthe instructions given.

AccountsOfficer(DMMU)

Post-Graduation Degree in Commerce with priorexperience will be preferred. Candidate should haveknowledge in Tally. Candidate having experience inworking in Project/Schemes funded by WB/GOI orrural/community development sector project will bepreferred.

1. Will be responsible for all finance andaccounting functions at the DMMU leveland perform the accounting & financefunctions of the State Society.Some of the core functions to beperformed by Accounts Officer atdistrict are:-

a.Maintaining proper books of accountsand consolidating accounts from Blocklevel.b.Compilation of accounts in District levelc. Preparing interim financial statements(Internal reports) to be submitted toSMMU in regular intervals.d. Ensure timely and up-to-date upkeep ofaccounts regularly.e. Maintaining Accounting and FinancialProcedures at Mission Units.f. Maintaining and compiling records ofCIF from Blocks.g. Incorporating internal controls inaccounting system at District levels.h. Preparing stock statement andupdating Fixed Assets Register afterproper physical verification at periodicintervals.i. Assisting external and internal auditteam in audit related matters,j. Monthly analysis of advances andensure its proper accounting.k. Quarterly Reconciliation of Paymentswith Expenditures to ensure properaccounting.l. Monthly analysis of statutory payments-deductions and remittances such as salestax, income tax , EPF etc. to ensure thatlegal and statutory deductions andremittances are made in time.

AccountsAssistant(DMMU)

Minimum BCom, with knowledge in computer applicationand Tally latest version. Candidate having priorexperience will be preferred.

The Accounts Assistant will assist DistrictAccounts Officer and will be responsiblefor performing all finance and accountingfunctions at District level as per theinstructions given.

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BlockAccountant(BMMU)

Post-Graduation Degree in Commerce with priorexperience will be preferred. Candidate should haveknowledge in Tally. Candidate having experience inworking in Project/Schemes funded by WB/GOI orrural/community development sector project will bepreferred.

1. Will be responsible for all finance andaccounting functions at the BMMU leveland perform the accounting & financefunctions of the State Society.Some of the core functions to beperformed by Block Accountan are:-

a.Maintaining proper books of accountsand consolidating accounts andsubmitting it to DMMU.b. Ensure timely and up-to-date upkeep ofaccounts regularly.e. Maintaining Accounting and FinancialProcedures at Block Mission Units.f. Maintaining and compiling records ofCIF at Blocks.g. Incorporating internal controls inaccounting system at Block levels.h. Preparing stock statement andupdating Fixed Assets Register afterproper physical verification at periodicintervals.i. Assisting internal audit team in auditrelated matters,j. Monthly analysis of advances andensure its proper accounting.k. Quarterly Reconciliation of Paymentswith Expenditures to ensure properaccounting.l. Monthly analysis of statutory payments-deductions and remittances such as salestax, income tax , EPF etc and ensure itproper accounting.

8.3 Training

8.3.1 SMMU, DMMU & BMMU Staff.

The financial and accounting staff at the State, District & Block level will be trained in therequirements of accounting and reporting under the Mission. Modules will be prepared andtraining will be included in their annual calendar. As the Mission is implementing computerizedfinancial management & Accounting system, the staff will be trained to operate thecomputerized systems. The CFO will have the overall responsibility of building capacity ofSMMU, DMMU & Block Staffs.

8.3.2 Block Level Federation

As per the Community Operational Manual, Training cell of BMMU will be take care of thefinancial management aspects at the Block Level Federation. They will be trained to provideregular/day to day training at the Block and village level. Refresher trainings will also be givenperiodically during the Mission period. The BMMU will have the primary responsibility ofbuilding the capacity of the Block village level Bookkeepers and Accountants.

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8.3.3 Village LevelThe office bearers of the Village Organisation and members of the various sub committees willbe trained on how to manage funds, maintaining books of accounts and financial records,financial reporting, financial accountability, maintaining transparency etc. The Block Programmanager in the Block will have the key responsibility in coordinating with the Accounts andMonitoring Facilitator in the BLF in building the capacity of the bookkeeper at the village leveland also to constantly give handholding support to them. Provision of books of accounts,development of standard training modules, training of trainers etc. will be done in building thefinancial management and accounting capacity at the village level.

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ANNEXURE-1

Format of Annual Work Plan.

Annual Work Plan 2012-13 at a glance.

For 1 Year - 6 Resource Block & 36 Intensive Block & 177 Non Intensive Block

S. No.Base Cost (INR

Lakh)% of Total

CostState Rural Livelihoods Missions

1 Office set-up- SMMU,DMMU,BMMU

2 Exposure visits of Senior Govt.officials & BankExecutives

3 Partnership with SIRD , NGO etc, Studies,Consultancies,

4 Staff Costs (SMMU and DMMU Only)

a Staff costs including allowances, statutory contributions,etc.

b Staff trainings and exposure visits

5 Rentals for office space, Stationery, Postage,Telephones,Transport, Field Travel, etc.

Sub Total

6 Stake Holder Workshop ( State, Regional, Thematic etc)


8 Block teams costs including salary allowances, statutorycontributions, etc.

9 Block teams trainings and exposure visits10 Social Mobilization /Resource Block Strategy

11 Financial Inclusion Pilots/Financial Literacy/E-bookkeeping/Bank Mitra

12 Revolving fund & Capital SubsidySub Total

13 Health Security , Food Security fund, Educationsecuirity and Debt Swaping fund

14 Agricultural,Animal Husbandry & Non farm SectorInterventions

Sub Total

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15 Hiring of agency for scouting, selecting innovations,organizing IF and Partnerships with Innovators

Sub Total16.Monitoring and Evaluation & Supervision

Monitoring & Evaluation , Supervision ,BaselineStudies

17. eNRLMS (States could wait)Consultancy for MIS design, IT Infrastructure, etc.

18 Skill Development And PlacementSkill Development And Placement

19 RSETI Training cost20 Non Intensive Block Budget

Budget for Non Intensive Block (177 Blocks)

TOTAL COSTS

GOI share ( INR in Crore)State Share (INR in Crore)

Total AAP Budget

Annexure 1A: Budget Summary for 1 year for 36 Intensive Block.

Budget Summary For 1 Year for 36 intensive Block

S.No. Components & Activities Base Cost

(INR Lakh)

State Rural Livelihoods Missions1 Office set-up(3DMMU & 36 BMMU)2 Exposure Visit for Senior Govt. Officails , Bank Executives3 Consultancies - HR agency cost4 Staff Costs( DMMU Only)A Staff costs including allowances, statutory contributions, etc.

B Staff trainings and exposure visits

5 Rentals for office space, Stationery, Postage, Telephones,Transport, FieldTravel, etc.

Sub Total

6 Stake Holder Workshop ( State, Regional, Thematic etc)

7Rentals for BMMU office space, Stationery, Postage, Telephones,Transport,Field Travel, etc.

8 Block teams costs including salary allowances, statutory contributions, etc.

9 Block teams trainings and exposure visits

10 Social Mobilization Pilots/Resource Block Strategy

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11 Revolving Fund & Capital Subsidy

12 Financial Inclusion Pilots/Financial Literacy/E-book keeping/Bank Mitra

Sub Total

13 Health Security ,Food security fund , education fund and Debt swaping fund

14 Agriculture, animal Husbandry& non Farm Sector interventions

Sub Total

15 Hiring of agency for scouting, selecting innovations, organizing IF andPartnerships with Innovators

Sub Total16.Monitoring & Evaluation, Supervision

Monitoring & Evaluation , supervision & Baseline Studies

17. Skill Development and PlacementSkill Development and Placement

18 RSETI Training costTOTAL COSTS

Annexure – 1B: Budget Summary for 1 year-6 Resource Block.

Budget Summary For 1 Year -6 Resource BlockS.

No.Base Cost

(INR Lakh)State Rural Livelihoods Missions1 Office set-up- SMMU,DMMU,BMMU2 Exposure Visit of Senior Gov. officials and Bank Executives3 Partnership with SIRD , NGO etc, Studies, Consultancies(HR)4 Staff Costs (SMMU and DMMU Only)

A Staff costs including allowances, statutory contributions, etc.

B Staff trainings and immersion

5 Rentals for office space, Stationery, Postage, Telephones,Transport,Field Travel, etc.

Sub Total

6 Stake Holder Workshops( State, Regional , Thematic)


8 Block teams costs including salary allowances, statutorycontributions, etc.

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9 Block teams trainings, Immersion and exposure visits10 Social Mobilization /Resource Block Strategy

11 Financial Inclusion Pilots/Financial Literacy/E-book keeping/BankMitra

12 Revolving fund & Capital SubsidySub Total

13 Health Security , Food Security fund, Education secuirity and DebtSwaping fund

14 Agricultural,Animal Husbandry & Non farm Sector Interventions

Sub Total

Hiring of agency for scouting, selecting innovations, organizing IFand Partnerships with Innovators

Sub Total15. Monitoring and Evaluation & Supervision

Monitoring & Evaluation , Supervision ,Baseline Studies

16.eNRLMS.

Consultancy for MIS design, IT Infrastructure, etc.

TOTAL COSTS

Annexure: 1C Non Intensive Budget Estimate for 1 Year.

Non Intensive Block budget estimated for 1 Year

Particulars Amount In Rs

Strengthening of SHG ( including basic training )Capacity building& Training to SHG/IB etc.

Revolving Fund to SHGs @Rs 10000/-IB/Capital Subsidy to SHGs ( maximum @ Rs1.00 lakh/SHG )SGSY infrastructure fund

Sub Total Unit cost ( In Lakh)Total estimated budget for 177 Non - intensive Block( in lakh)

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Annexure: 2

List of Consolidated Interim Unaudited Financial Reports for State Level.

No ofAnnexure

IUFR Ref FMR Descriptions

Annexure 2A 2 Source and Uses of funds-StatesAnnexure 2 B 3A Expenditures against Annual Agreed Work Plans-StatesAnnexure 2C 4 Forecast of Expenditures for two six months periods ending ___

and _____

Annexure 2D 5 Summary of Payments of Prior Review Contracts.

Notes:

1. IUFR (4) and IUFR (5) are required on a Six monthly basis.

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Annexure 2A

Interim Unaudited Financial Report (IUFR) for the quarter ended.......................

(Amount in Lakhs)

TotalA. Opening Balances

- Cash and Bank Balances.- Advances.

B. Receipts.- Grants received from MoRD-NRLP- Grants received from MoRD-NRLM.- Grants received from State – NRLM.- Other Grants- Other Receipts

a) Interest from Banks.b) Other Income.c) Liabilities.

C. Uses of Funds.- National Rural Livelihoods Project.

a) State Rural Livelihoods Mission.b) Institution Building and Capacity Building.c) Community Investment Support.d) Monitoring & Evaluation.e) Skill Development & Placementsf) Special Programs

- National Rural Livelihoods Mission (Summary Only)- Other Projects (Summary only)

D Closing Balances- Cash and Bank Balances.- Advances.

IUFR- 2

Sources and Uses of Funds for...... (Assam)

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Annexure 2B

Interim Unaudited Financial Report (IUFR) for the quarter ended.......................

Approved AnnualWork Plan.

Actual ExpenditureReportedThisQuarter

Cumulativefor the Year

State Rural Livelihoods MissionState Mission Management Unit

- Office Refurbishment.- Office furniture, fixtures etc.- Office Equipments.- Hiring of Vehicles.- Staff Costs.- Operating Costs

District Mission Management Units- Refurbishment Cost.- Office Equipments- Staff Costs

State resource Centres- Support to SIRD & others- District Resource Centres- Community Resource Centres- Training of State, District & Block

Staff.Institutional Building and CapacityBuilding.Institutional BuildingCommunity Resource Persons.Self Help GroupsVillage OrganizationsBlock Level FederationsOther Institutions.Block Mission Management UnitsOffice Refurbishment.Office furniture, fixtures etc.Office equipmentsStaff CostsOperating Costs

IUFR- 3A

Expenditures against Annual Agreed Work Plan......... (Name of State)

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Community Investment Support.Livelihoods Interventions, Health & FoodSecurity, Debt Swapping.Agriculture Interventions.Dairy InterventionsNon Farming InterventionsSpecial programsSpecial Initiatives-Health, Nutrition etcSpecial purpose vehicles.Implementation in difficult areas.GRAND TOTAL

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Annexure 2C

Interim Unaudited Financial Report (IUFR) for six months ended......................

From xx/xx/20.. toxx/xx/20..

From xx/xx/20..to xx/xx/20..

Total

State Rural Livelihoods MissionState Mission Management Unit

- Office Refurbishment.- Office furniture, fixtures etc.- Office Equipments.- Hiring of Vehicles.- Staff Costs.- Operating Costs

District Mission Management Units- Refurbishment Cost.- Office Equipments- Staff Costs

State resource Centres- Support to SIRD & others- District Resource Centres- Community Resource Centres- Training of State, District & Block

Staff.Institutional Building and CapacityBuilding.Institutional BuildingCommunity Resource Persons.Self Help GroupsVillage OrganizationsBlock Level FederationsOther Institutions.Block Mission Management UnitsOffice Refurbishment.Office furniture, fixtures etc.Office equipmentsStaff CostsOperating CostsCommunity Investment Support.Livelihoods Interventions, Health & FoodSecurity, Debt Swapping.Agriculture Interventions.Dairy InterventionsNon Farming InterventionsSpecial programsSpecial Initiatives-Health, Nutrition etcSpecial purpose vehicles.Implementation in difficult areas.

IUFR- 4

Forecast of Expenditures for two Six month periods ending....and.........

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TOTAL FORECAST OF EXPENDITURE

Annexure 2 D

Six- monthly Interim Unaudited Financial Report (IUFR) for Period..... To ...................

S.No

Component/Sub-component

WBR# Consultants/Contractors ContractValue

Payment Details

Date ofpayment

Paid thisquarter.

Cumulative

IUFR 5

Summary of Payments of Prior Review Contracts for...... (Name of State)

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Annexure - 3

For Six Monthly Period ………. for……. for State of ……. (Name of State)

To be sent to NMMU twice in a year along with (Financial Management Report ) IUFR for sixmonth ending 30th September and 31st March.

A. STAFFING: Qualified and Skilled Finance and Accounts Staff in place.

No ofDMMUs inState

SMMU(Designation wise)

DMMU(Designation wise)

Remarks

OptimalStaffingas perPIP

SanctionedPosts

PostFilled

PostVacantandSinceWhen.

OptimalStaffingas perPIP

SanctionedPosts

PostFilled

PostVacantandSinceWhen.

B. TRAINING OF FM STAFF

Please provide information on training conducted for FM Staff in last six months

Level at which trainingwas conducted(National/State/District/Sub-District)

Trainer(If in-housetraining, mentiondesignation. IfExternal Trainer,mentionConsultant)

Number ofStaff/Designationof StaffTrained.

DurationofTraining.

KeyTopics

Remarks

SMMUDMMUCommunity

C.DELEGATION OF ADEQUATE FINANCIAL AND ADMINISTRATIVE POWERS

Please provide information on delegation of financial powers to Head of SMMU and DMMUalong with monetary limits.

Delegation of financial powers toHead of SMMU

Delegation of financial powers toHead of DMMU

Consolidates FM Indicators for State Level

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D. STATUS OF FM MANUALS

Please provide information on FM Manuals (Status of preparation, likely date offinalization, whether circulated to staff, status of translation..etc.)

State FinancialRules

State FM Manual Community LevelFM Manual.

Any other FMManual (s)

E. STATUS OF SHARE OF STATE FOR NRLM FOR FINANCIAL YEAR…………….

State Share due for NRLMto SMMU

(Rs in Lakhs)

Actual Funds Received forState Share.

Remarks

Date ofReceipts.

AmountReceived(Rs…Lakhs)

F. ACCOUNTING SOFTWARE

Is Accounting Softwarebeing used?Mention Yes or No

If ‘Yes” please specifyName of Accountingsoftware.

If “No” please mentionlikely date forimplementation ofSoftware at SMMU andDMMU.

SMMU DMMU

G.INTERIM UNAUDITED FINANCIAL REPORTS

Date of submission of IUFR to NMMUfor last 2 quarters by the State.

Did last quarterly State IUFR include alldistricts?

(Yes/No)If “no” please mention name of districts notincluded in the IUFR.

Quarter (…. to …) Quarter (…. to …)

I.STATUS OF BANK RECONCILIATION Statement (BRS) As on…. (Mention Date)

BRS completed up to period ………(Mention date)

Signatory of Bank Account(Designation(s) of Officials)

SMMU DMMU SMMU DMMU

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J.STATUS OF STATUTORY AUDIT OF SRLM FOR FINANCIAL YEAR……………

K. STATUS OF INTERNAL AUDIT OF SRLM FOR FINANCIAL YEAR ………………………

Name ofFirm

Date ofAppointmentof Auditor.

Duration ofAppointment

Audit Fee Total No ofUnits.

No of Unitscovered inInternalAudit.

Periodcovered

Units notcovered

Remarks

C. Statutory Audit for Financial Year …….. D. Compliance of StatutoryAudit of Financial Year.

NameofFirm.

Date ofAppointmentof Auditor.

Duration ofAppointment.

AuditFees

Scheduleof Audit.

Has TOR asper financialManagementManual beenprovided toAuditor?“Yes” or “No”

Likely dateofsubmissionof AuditCertificateto SRLM.

Remarksabout theprogressof Audit.

Period forwhichcompliancereport hasbeensubmitted toNMMU

Date ofsubmission ofComplianceReport toNMMU

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Annexure 4

FORM GFR 19-A

Form of utilization certificate

S.No Letter No.. and Date Amount

Total

1. Certified that out of Rs …………….. of grants-in-aid sanctioned during the year ……. Infavour of ………….. under this Ministry / Department Letter No. given the margin and Rs…..on account of unspent balance of the previous year, a sum of Rs ……… has been utilized forthe purpose of ……. For which it was sanctioned and that the balance of Rs …… remainingunutilized at the end of the year has been surrendered to Government ( vide No……dated……) will be adjusted towards the grants-in-aid payable during the next year …………

2. Certified that I have satisfied myself that the conditions on which grants-in-aid wassanctioned have been duly fulfilled / are being fulfilled and that I have exercised the followingchecks to see that the money was actually utilized for the purpose for which it was sanctioned.

Kinds of Checks exercised.

1.

2.

3.

4.

5.

Signature………………Designation…………….Date……………………

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Annexure 5

FORM GFR-40

REGISTER OF FIXED ASSETS

Name and Description of the Fixed Assets ______________

Date Particulars ofSupplier Cost

Particulars of Supplier Cost of theAsset

Location ofAsset

RemarksName andAddress

BillNo…andDate

1 2 3 4 5 6 7

NOTE: The Items of similar nature but having significant distinctive features (e.g. Study table,office table, computer table, etc.) should be accounted for separately in stock.

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Annexure 6

SlNo

Period ofAccounts coveredby Audit

AuditPara No

Date ofIssue

BriefDetails ofAuditObjection

ActionTaken

Date ofSettlement

Remarks

REGISTER OF OUTSTANDING AUDIT OBSERVATIONS

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Annexure 7

FORMAT OF BANK RECONCILIATION STATEMENT

Month

Bank’s name:

SlNo

Particulars Amount.. Rs Amount...Rs

A Balance as per BankStatement.

B ADD:(i) Amount Deposited but

not credited by Bank.(ii) Amount debited but nottaken to Cash Book.

C SUB TOTAL (A+B)D LESS:

(i)Cheque issued but notpresented in the Bank.(ii)Amount credited by Bankbut not taken into CashBook.

E Balance as per CashBook.(C-D)

List of Cheque not presented inthe Bank as per D (i)

Amount Date ofEncashment

Cheque No

TOTAL

Prepared By Checked by Approved By

(Accounts Assistant) (Account Officer) (Head of SMMU/DMMU)

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Annexure 8

Components Sub-Components Activities

State RuralLivelihoods

Mission

Office Set-up

Refurbishment of Office Space,furniture,fixtures,AV facilities.Office Furniture,fixtures etcOffice EquipmentsWebsite development, etc

Workshop, training and exposure visitsStaff trainings and exposure visits.Exposure visits for senior govt officials,bank executive,othersStakeholders workshops (State, regional and thematic)

Studies,Consultancies

Staff hiring costs like fees for HR Agency,Headhunting firm,advertising etc.Study of quality and inclusion in SHG/SHG Federations/Producer Organizations.Study on Financial inclusion strategies.Feasibility studies of Livelihoods interventios.

State Resource Centre Partnership with SIRD, NGO, others etcDistrict Resource centres.

Staff Costs (SMMU and DMMU) Staff Costs including allowances,statutory contributions etc.Staff trainings and exposure visits.

Operating Costs

Rentals for Office space.Stationary, postage, Telephones.Transport, Field Travels etc.Hiring of Vehicles.

InstitutionalBuilding and

Block Team Costs Staff Costs of Block Teams including Salary allowances, Statutory Contributions.Training and Exposure Visits. Block Teams training and exposure visits.

CHART OF ACCOUNTS AT STATE LEVEL

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CapacityBuilding.

Social Mobilization/Resource BlockStrategy.

Community Resource Persons,Self Help Groups,Village organizations,Block levelFederations,Other Institutions.

Financial InclusionFinancial inclusion will include interventions for financial literacy, credit linkages, e-book keeping, Bank Mitra etc

CommunityInvestment

Support

Health Security ,Food Security ,Educationand Debt swaping.

Livelihoods Promotions

Agriculture InterventionsDairy Interventions.Non farming Interventions.Animal Husbandary Interventions.

Micro Planning Pilots. Micro Planning for Livelihoods activities.InnovationsForum Innovation and Partnership Fund Hiring of agency for scouting, selecting innovations, organizing IF and

Partnerships with InnovatorsMonitoring &Evaluation M&E Baseline studies/survey/Process monitoring/workshops/External Audit/Internal

Audit/Social AuditeNRLMS MIS & IT Infrastructure Consultancy for MIS design, IT Infrastructure, etc.SkillDevelopment& Placements

Placements linked skill development fundPartnership with recruitment and placement agencies, technical training anddevelopment institutes.

RSETI RSETI Training cost. Workshops, consultancy, training for unemployed BPL youths.

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SELECTION CRITERIA FOR SELECTION OF STATUTORY AUDIT

AT

STATE LEVEL

TO BE ADDED

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Annexure 9

TERMS OF REFERENCE FOR STATUTORY AUDIT AT STATE LEVEL FOR ASRLMS

Background:

Government of Assam is implementing a project funded by MoRD and World Bank throughAssam State Rural Livelihoods Mission Society (ASRLMS). SRLM has been set up by theGovernment of Assam as part of its strategy to address rural poverty through enhancing thelivelihoods of the poor. SRLM is an independent and autonomous institution registered underSocieties Act. The strategy highlights building of pro-poor local institutions/groups throughnurturing institution of the poor by supporting formation, strengthening and empowering self-managed community organizations and adopting demand responsive and participatoryprocesses.

Objectives of the Project:

(a) To create enabling pro poor policy environment;(b) To contribute to the lives of the rural poor throughout the state through empowerment andfostering strong self managed grass root institution and support investments by the groups ofthe poor;(c) To bring in convergence among various poverty reduction and empowerment Missions;(d) To evolve strategies and approaches for the empowerment of the poor through socialmobilization and institution building for community participation;(e) To build support and service structures for providing social and technical guidance to thepoor in their overall social progress and livelihood development;(f) To undertake all relevant activities, including implementation of specific Missions funded bygovernment, bilateral, multi-lateral and other funding agencies for elimination of poverty, andlivelihoods development of the poor;(g) Establish models for participatory social and economic development of the rural poor inconformity with all these objectives and prove their relevance, sustainability and suitability ofreplication;(h) To strengthen and form producer co-operatives/groups around key commodities, non-farmproducts and services and expanding poor people’s participation in existing commodity co-operatives and producer groups;(i) To organize a forum for show casing and supporting various innovations andexperimentation with new ideas both for social service delivery and livelihoods promotion;(j) To promote Micro Finance Institutions in order to deal with the development of rural poor byway of providing financial assistance and in obtaining commercial funding or by way ofrefinancing under the guidance of state level society with the overall objective of developingthe micro finance sector in the State;(k) Support Village Governments in becoming more responsive and effective in delivery ofservices and assisting the rural poor especially women;(l) Such other activities as may be necessary in furtherance of aforesaid objectives

Project Scope and Components:

It is envisaged that the project, to be implemented over a period of 5 years, will cover in 1st

phase around 88420 target families in 1985 villages in 42 Blocks spread over 7 districts andthe project cost is estimated at Rs 241.99 crores .

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The Main broad components of the project are:

Social Mobilization, Institutional Building & Capacity Building: Financial Inclusion. Community Investment Fund Skill Development Livelihood Intervention.

Implementation ArrangementsAssam State Rural Livelihood Mission Society(ASRLMS), constituted by State Government,would oversee the implementation of all NRLM related activities in the State. Its GoverningBody and the Executive Committee will provide guidance and advice in all aspects of planningand implementation. The Governing Body would be chaired by the Chief Minister with thePrincipal Secretary, Panchayat & Rural Development as its Member Secretary / Convenor.The Executive Committee would be chaired, by the Chief Secretary with the PrincipalSecretary, RD as Vice Chairperson and the State Mission Director as convenor.

State Level: At the state level, the State Mission Management Unit (SMMU) has beenformed and staffed with a team of dedicated development professionals. The project and theSRLM is headed by State Mission Director.District level: District Mission Management Unit (DMMU) is established in each 7 districts in1st phase. The District Mission Manager heads the DMMU with primary responsibility ofCoordinating with their Blocks for effective implementation and convergence with ongoingprogrammes in the district.Block Level: At the Block Level, Block Mission Management Units will be implemented ineach of the 42 Blocks in 1st phase. The Block Project Manager heads the BMMU who will workclosely with Block/Village level Federations and SHGs.

OBJECTIVES OF AUDIT

The essence of the World Bank’s audit policy is to ensure that the Bank receives adequateindependent, professional audit assurance that the proceeds of World Bank loans were usedfor the purposes intended, that the annual project financial statements are free from materialmisstatement, and that the terms of the loan agreement were complied with in all materialrespects.

The objective of the audit of the Project Financial Statement (PFS) is to enable the auditor toexpress a professional opinion as to whether.

(1)the PFS give a true and fair view of the sources and applications of project funds for theperiod under audit examination.

(2)the funds were utilized for the purposes for which they were provided

(3)the procurement procedure prescribed in the Procurement Manual has been followed and

(4)Expenditure shown in the PFS are eligible for financing under the relevant loan for creditagreement. In addition, where applicable, the auditor will express a professional opinion as towhether the Financial Management Reports submitted by project management may be reliedupon to support any applications for withdrawal from the IDA Credit/Loan.

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The books of account that provide the basis for preparation of the PFS are established toreflect the financial transactions of the project and are maintained by (SRLM) and itsconstituent state, district and block level units.

AUDIT STANDARDS

The audit will be carried out in accordance with the Auditing Standards promulgated by theInstitute of Chartered Accountants of India. The auditor should accordingly consider materialitywhen planning and performing the audit to reduce audit risk to an acceptable level that isconsistent with the objective of the audit Although the responsibility for preventing irregularity,fraud, or the use credit/loan proceeds for purposes other than as to have a reasonableexpectation of detecting material misstatements in the project financial statements.

AUDIT SCOPE

In conducting the audit, special attention should be paid to the following:

All external funds have been used in accordance with the conditions of the relevant legalagreements and only for the purposes for which the financing was provided. Relevant legalagreements.

Effective project financial management system, including internal controls, were inoperation throughout the period under audit examination. This would include aspects suchas adequacy and effectiveness of accounting, financial and operational controls and anyneeds for revision level of compliance with established policies, plans and proceduresreliability of accounting systems, data and financial reports; methods of remedying weakcontrols of creating them where there are none; verification of assets and liabilities; andintegrity, controls security and effectiveness of the operation of the computerized system;and

Counterpart funds have been provided and used in accordance with the relevant legalagreements and only for the purposes for which they were provided;

All necessary supporting documents, records, and accounts have been kept in respect ofall project transactions including expenditures reported via Interim unaudited FinancialReports (IUFRs) where applicable. Clear linkages should exist between the books ofaccounts and reports presented to the Bank; certification of IUFR and financial reportreconciliation.

The project accounts have been prepared in accordance with the accounting principlesdefined in the Project Financial Management and give a true and fair view of the financialposition of the project at the year end and of resources and expenditures for the yearended on that date; and

Goods and services financed have been procured in accordance with the procurementprocedure prescribed in the Procurement Manual.

PROGRAMME F INANCIAL STATEMENTS

Programme Financial Statements should include:

(A)Receipts & Payments Account, Income & Expenditure Accounts and Balance Sheet.

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(B) Reconciliation of Claims to Total Applications of Funds

(C)Other Statements or Schedules which may include:

A separate list cumulative project expenditures by Project Component/Sub-components; A detailed list of assets created or purchased from project funds.

(D)Management Assertion: Management should sign the project financial statements andprovide a written acknowledgement of its responsibility for the preparation and fairpresentation of the financial statements and an assertion that project funds have beenexpended in accordance with the intended purposes as reflected in the financial statements.An example of a Management Assertion Letter is shown at Annexure I.

STATEMENTS OF EXPENDITURES AND FINANCIAL MANAGEMENT REPORTS

In addition to the audit of the PFS (Project financial statement), the auditor is required to auditall Interim Financial Reports (IFRs) for withdrawal applications made during the period underaudit examination. The auditor should apply such tests as the auditor considers necessaryunder the circumstances to satisfy the audit objective. In particular, these expenditures shouldbe carefully examined for project eligibility by reference to the relevant financing agreements.Where ineligible expenditure are identified as having been included in withdrawal applicationsand reimbursement against, these should be separately noted by the auditor.

An audit report on the project financial statements should be prepared in accordance with theAuditing Standards promulgated by the Institute of Chartered Accountants of India .Thesestandards require an audit opinion to be rendered related to the financial statements taken aswhole, indicating unambiguously whether it is unqualified or qualified and, if the latter, whetherit is qualified in certain respects or is adverse or a disclaimer of opinion. In addition, the auditopinion paragraph will specify whether , in the auditor’s opinion.

(1)the funds were utilized for the purposes for which they were provided

(2) Expenditure shown in the PFS are eligible for financing under the relevant loan or creditagreement and, where applicable.

(3) the IFRs submitted during the period are supported by adequate detailed documentationmaintained in the project accounting offices.

A sample audit report wordings are shown in Annexure II

MANAGEMENT LETTER

In addition to the audit report on the project financial statements, the auditor will prepare amanagement letter containing recommendations for improvements in internal control and othermatters coming to the attention of the auditor during the audit examination, possibly includingmatters such as the following:

observations on the accounting records, systems, and controls that were examined duringthe course of the audit.

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deficiencies or weakness in systems and controls, together with specific recommendationsfor improvement.

compliance with financial covenants in the following agreements. matters that might have a significant impact on the implementation of the project. the status of recommendations from previous management letters ,including any issues

which remain to be addressed and any key issues which recurred. any other matters that the auditor considers pertinent.

A sample covering letter that could be used to transmit a management letter is shown atAnnexure III

PERIOD, TIMING AND SAMPLE COVERAGE OF STATUTORY AUDIT.

The Statutory audit will be done for financial year 2012-13 The Auditors should prepare theirfinancial proposal figure based on the volume of work stated below:

The audit will be carried out on a yearly basis as given below:

Unit No. of Units in FY…………….SMMU 1DMMU ……BMMU ……

It is expected that auditor should verify at least …% of CIF (community investment fund)advance which are provided to SHG Federations /SHG ( Self Help Groups). The basis ofsample will be provided by the auditor at the time of planning of audit.

Timing: The auditor would be carried out annually and the report should be provided to theSMMU latest by 30th june each year to facilitate approval and placements before the ExecutiveCommittee and submission to the World bank by September 30 each year. The auditor mustsubmit three copies of the audited accounts and audit report to the CEO at State office(SMMU) in time.

Period of Appointment: The auditor will be appointed for a period of one year for the financialyear ……….. and may be further extended for two more years.

KEY PERSONAL

The list of key personal and whose CVs and experience would be evaluated is as follows:

S.No KeyProfessionals

Description ofServices to beprovided

Experience

1 Partner /AuditManager

Overall coordination, &planning, teamleadership, reporting,liaison with client

Qualified Chartered Accountant with atleast 10 years’ experience as a partnerwith expertise in the area of statutoryaudit planning execution and reporting

2. Audit Team Responsibility to lead Qualified Chartered Accountants with

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Leader the audit teams in thefield, planning andexecution of the audits,discussion with headsof offices at CommunityLevel/Block/district/state units and reportwriting and finalization

at least 5 years experience in Statutoryaudit with ability to lead the team &expertise in the area of statutory auditplanning, execution and reporting

3. Team Member Audit of SMMU andField level audit ofDMMU, BMMU

CA (Inter) with 2 years of experience inAccounting, audit and report writing

The audit firm should provide CVs of key personnel who are expected to be engaged in auditwork for evaluation purpose by ……. SRLM

GENERAL

The auditor should be given access to any information relevant for the purposes of conductingthe audit. This would normally include all legal documents, correspondence, and any otherinformation associated with the project and deemed necessary by the auditor. The informationmade available to the auditor should include but not be limited to copies of the Bank’s ProjectAppraisal Document, the relevant Legal Agreements, copy of MoU between MoRD and theState Financial Management Manual for NRLM, Financial Rules and Procurement Manual andapproved State Perspective and Implementation Plan (SPIP) and Annual Plan of SRLM .Theproject will provide relevant documents, if any, required by the auditor.

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Annexure I

Example of a Management Assertion Letter

(Project Letterhead)

(To Auditor) (Date)

This assertion letter is provided in connection with your audit of the financial statements of the____________________ project for the year ended____________________ we acknowledgeour responsibility for the fair presentation of the financial in accordance with the cash basis ofaccounting followed by the Government of India, and we confirm, to the best of our knowledgeand belief, the following representations made to you during your audit.

The project financial statements are free of material misstatements, including omissions. Project funds have been used for the purposes for which they were provided. Project expenditures are eligible for financing under the Loan/Credit agreement. There are have been no irregularities involving management or employees who have a

significant role in internal control or that could have a material effect on the project financialstatements.

Procurement procedures as prescribed for the project have been followed. We have made available to you all books of account and support documentation relating to

the project. The project has complied with the conditions of all relevant legal agreements, including the

Financing Agreement, the Project Agreement, the Project Appraisal Document, and theProject Implementation Plan.

(Chief finance officer) (State Project Director)

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Annexure II

MODEL AUDIT REPORT-UNQUALIFIED OPINION

Addressee-

Introductory Paragraph

We have audited the accompanying financial statements of the BRLPS Project [under WorldBank Loan No.____________/IDA as on March 31, 20XX [ any other additional yearsnecessary] for the year(s) then ended. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

Scope Paragraph

We conducted our audit in accordance with Auditing and Assurance Standards issued by theInstitute of Chartered Accountants of India. Those Standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.

Opinion Paragraph

In our opinion, the financial statements give a true and fair view of the Sources and Applicationof Funds and financial position of ASRLMS for the year ended March 31 20XX, in accordancewith relevant national standards. We are also satisfied that the procurement procedureprescribed in the Procurement Manual under ASRLMS have been followed.

In addition, (a) with respect to IFRs adequate supporting documentation has been maintainedto support claims to the World Bank for reimbursements of expenditures incurred; and (b)which expenditures are eligible for financing under the Loan/Credit Agreement [1 (c) the IFRsubmitted and procedure and internal controls involved in their preparation can be relied uponto support the withdrawals.

[Name and Address of Audit Farm]

[date-Completion Date of Audit]

[Auditor’s Address]

[date]

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Annexure III

Example of a Management Letter

(Audit firm Letterhead)

(Date)

To Project Management

In connection with our audit of the financial statements of the ASRLMS for the yearended___________ we familiarized ourselves with the project documents the internalguidelines and circulars applicable during the period under audit. We also reviewed thebusiness of the Project and evaluated the accounting systems and related internal controls ofthe Project in order to plan and perform our audit.

This Letter to Project Management includes observations noted during the course of our auditexamination in the following areas:

Matters having a significant impact on the implementation of the Project Opportunities for strengthening financial management records, systems and controls,

together with recommendations for improvement Status of maintenance of Project books and records Accuracy of Project financial statements Compliance with prescribed procurement procedures Status of prior audit recommendations

The matters contained in this Management Letter are intended solely for the information ofProject management, for such timely consideration and action as Project management maydeep appropriate. They have all been considered by us in formulating the audit opinionexpressed on the project financial statements in our audit report dated___________ and theydo not alter the opinion expressed in that audit report.

We wish to take this opportunity to thank Project Management for the courtesies andcooperation extended to our auditors.

Yours truly

(Name and Title)

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Annexure IV

Suggested Procurement audit check list related to Goods /Works

Once contracts for goods/works have been selected for detailed audit review the followingcheck list/post review list may be followed:

1)Date of audit

2)Procurement by State/District/any other organization receiving project funds.

3) Description of items procured, quantity and estimated value.

4) Whether procedure laid down in the Manual was observed while procuring goods andworks?

5) if not, any other, justification was available ?

6)Whether bid was advertise/placed in public domain?

7)Whether sufficient time was given to bidders for preparing and submitting the bids?

8)Whether the bids were opened at the notified in the presence of bidders?

9)Whether the bids were evaluated in terms of the provisions of the bid documents and theevaluation report was available ?

10) Whether contract was awarded to the lowest evaluated responsive bidder fulfilling thequalification requirements indicated in the tender document ?

11) Whether the contract was awarded within original bid validity period?

12)Whether the signed copy of the contract/purchase order was available?

13)Whether articles received/work completed in time?

14) Whether payment released timely to the supplier/contractor or valid reasons for delay?

15)Whether the assets procured are accounted for ?

16) Whether any complaint was received regarding the procurement and was addressed?

17)Whether procurement related complaint handling mechanism as envisaged in the projectimplementation plan is available

18) Whether any procurement related irregularities reported in the previous audit report havebeen complied with?

19)Whether Performance Security was Sought?

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Procurement Audit check list related to Service Contract

Once service contracts have been selected for detailed audit review the following check listmay be followed:

1)Date of audit

2)Procurement by State/District/any other organization receiving projects funds

3)Whether the Terms of Reference covering the scope of work, time schedule out put required,etc were prepared.

4)Whether the Expressions of Interest were checked against advertisement and shortlisted ofservice providers/consultants prepared?

5)Whether the Request for Proposals (RFPs) were issued to short listed serviceproviders/consultants ?

6)Whether sufficient time was given to service providers/consultants for preparing andsubmitting the proposals ?

7)Whether the proposals were invited in two separate envelopes, one containing technical andanother for financial proposals ?

8) Whether the evaluation was done in two stages, first the evaluation of technical proposalsand then opening of the financial proposals of only technically qualified serviceproviders/consultants and reports are available thereof?

9)Whether the contract was awarded within the validity period of the original proposals ?

10)Whether the signed copy of the contract was available?

11)Whether the services were completed within the prescribed time limit or valid reasons fordelayed completion?

12)Whether payment was released timely to the service providers/consultants or valid reasonsfor delay?

13)In the case of single source selection, if there was justification for the purpose?

14) Whether any complaint was received regarding the procurement and was addressed?

15)Whether procurement related complaint handling mechanism as envisaged in the ProjectImplementation Plan is available

16) Whether any procurement related irregularities reported in the previous audit report havebeen complied with ?

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ANNEXURE 10

TERMS OF REFERENCE OF INTERNAL AUDIT AT STATE LEVEL FOR ASRLMS FORINTERNAL AUDITOR

BackgroundGovernment of Assam is implementing a Mission funded by MoRD and World Bank throughAssam State Rural Livelihoods Mission Society. ASRLMS is an independent has been set upby Govt of Bihar as part of its strategy to address rural poverty through enhancing thelivelihoods of the poor. ASRLMS is an independent and autonomous institution registeredunder Society Registration Act 1860 in the year 2011. The Society as outlined highlightsbuilding of pro-poor local institutions/groups through nurturing institutions/groups of the poorby supporting formation, strengthening and empowering self-managed communityorganizations and adopting demand responsive and participatory processes. ASRLMS willalso facilitate participation of poor and the disadvantaged in forming producer cooperativesand groups around commodities-non farm products and services.

Objectives of the Project(a) To create enabling pro poor policy environment;(b) To contribute to the lives of the rural poor throughout the state through empowerment andfostering strong self managed grass root institution and support investments by the groups ofthe poor;(c) To bring in convergence among various poverty reduction and empowerment Missions;(d) To evolve strategies and approaches for the empowerment of the poor through socialmobilization and institution building for community participation;(e) To build support and service structures for providing social and technical guidance to thepoor in their overall social progress and livelihood development;(f) To undertake all relevant activities, including implementation of specific Missions funded bygovernment, bilateral, multi-lateral and other funding agencies for elimination of poverty, andlivelihoods development of the poor;(g) Establish models for participatory social and economic development of the rural poor inconformity with all these objectives and prove their relevance, sustainability and suitability ofreplication;(h) To strengthen and form producer co-operatives/groups around key commodities, non-farmproducts and services and expanding poor people’s participation in existing commodity co-operatives and producer groups;(i) To organize a forum for show casing and supporting various innovations andexperimentation with new ideas both for social service delivery and livelihoods promotion;(j) To promote Micro Finance Institutions in order to deal with the development of rural poor byway of providing financial assistance and in obtaining commercial funding or by way ofrefinancing under the guidance of state level society with the overall objective of developingthe micro finance sector in the State;(k) Support Village Governments in becoming more responsive and effective in delivery ofservices and assisting the rural poor especially women;(l) Such other activities as may be necessary in furtherance of aforesaid objectives

Project Scope & ComponentsIt is envisaged that the project, to be implemented over a period of 5 years, will cover in 1st

phase around 88420 target families in 1985 villages in 42 Blocks spread over 7 districts andthe project cost is estimated at Rs 241.99 crores .

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The Main broad components of the project are:

Social Mobilization, Institutional Building & Capacity Building: Financial Inclusion. Community Investment Fund Skill Development Livelihood Intervention.

Implementation ArrangementsAssam State Rural Livelihood Mission Society(ASRLMS), constituted by State Government,would oversee the implementation of all NRLM related activities in the State. Its GoverningBody and the Executive Committee will provide guidance and advice in all aspects of planningand implementation. The Governing Body would be chaired by the Chief Minister with thePrincipal Secretary, Panchayat & Rural Development as its Member Secretary / Convenor.The Executive Committee would be chaired, by the Chief Secretary with the PrincipalSecretary, RD as Vice Chairperson and the State Mission Director as convenor.

State Level: At the state level, the State Mission Management Unit (SMMU) has beenformed and staffed with a team of dedicated development professionals. The project and theSRLM is headed by State Mission Director.District level: District Mission Management Unit (DMMU) is established in each 7 districts in1st phase. The District Mission Manager heads the DMMU with primary responsibility ofCoordinating with their Blocks for effective implementation and convergence with ongoingprogrammes in the district.Block Level: At the Block Level, Block Mission Management Units will be implemented ineach of the 42 Blocks in 1st phase. The Block Project Manager heads the BMMU who will workclosely with Block/Village level Federations and SHGs.

At the Community level, the Mission will be implemented through:(i) Block Level Federations.(ii) Village Organizations(iii) Self Help Groups.

Objectives of the AuditThe objectives of the internal audit are to:(i) enable the auditor to express a professional opinion on the effectiveness of the overallfinancial management and procurement arrangements;

(ii) whether the overall financial management and arrangements including the system ofinternal controls as documented in the Project Financial Management Manual (FMM),Community Operations Manual (COM), the Project Implementation Plan (PIP) are in practice,effective and adequate, commensurate to the nature of the operations and

(iii) provide project management with timely information on financial management aspects ofthe project, including internal controls and compliance with financing agreements, to enablefollow-up action.

In addition, it is expected that internal audit should play a role in assisting management withfraud-related issues, including the prevention, detection and investigation of fraud as part of“bringing a systematic, disciplined approach to evaluate and improve the effectiveness of riskmanagement, control and governance processes.

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Coverage and Standards for the Audit:The audit would cover (number of districts) 7 Districts and 42 Blocks of ASRLMS.The auditwould cover the entire Mission covering all implementing units at State level, District level andBlock level including Block level federations and village level federations on a sample basis.The audit would also cover all consultancies or other contracts that may be entered into by theimplementing agencies. The internal audit should be carried out in accordance with theAuditing & Assurance Standards prescribed by the Institute of Chartered Accountants of Indiaand will include such tests and controls, as the auditor considers necessary under thecircumstances.

ScopeSpecific areas of coverage of the audit will include the following:

Project level (SMMU, DMMU and BMMU):

In conducting the audit, special attention should be paid to assessing whether adequatecontrols have been established and complied with to ensure:

(a) All external funds have been used in accordance with the conditions of the relevant legalagreements’ and only for the purposes for which the financing was provided;

(b) All necessary supporting documents, records, and accounts have been kept in respect ofall project transactions including expenditures reported via Interim Financial Reports (IFR). Toascertain that IFR are properly filled up and submitted on time to SMMU by DMMU and toDMMU by BMMU.

(c) Counterpart funds have been provided and used in accordance with the relevant legalagreements and only for the purposes for which they were provided;

(d) Project assets are adequately safeguarded and used solely for their intended purposes;and

(e) Risk Assessment report be prepared by the auditor in the first quarterly report(i) Identifying what are the risk in the project.(ii) Assessment of risk (high, medium, low)(iii) Ensure that there is an appropriate response to all risk.(iv) Informing the authority about the risks which are outside acceptable limits, usually thosewhich are to be tolerated or taken for the potential risk.f) An assessment of the adequacy of the project financial management systems, includinginternal controls. This would include aspects such as adequacy and effectiveness ofaccounting, financial and operational controls, and any needs for revision; level of compliancewith established policies, plan and procedures; reliability of accounting systems, data andfinancial reports; methods of remedying weak controls or creating controls in areas where theyare lacking; and verification of assets and liabilities.

g) Efficiency and timeliness of the funds flow mechanism at the DMMUs and BMMUs and tothe Community Institutions. The auditors are required to verify and comment upon the flow offund from SRLM to SHG Federations and SHGs.

h) Reconciliation between IUFR and reimbursement of fund.

i) Verification & certification of IUFR submitted by BMMU/DMMU to SMMU and further to theMoRD.

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j) Method of remedying week controls or creating them where the controls do not exist.

k) Whether the fund/ tranche released to the Community Institutions are properly approved bythe officer in DMMU/BMMU having the necessary authority, and the conditions (triggers/graduation criteria) for tranche release (as provided in the COM for various funds) have beencomplied and are in line with the financing agreement, with the World Bank.

l) Whether the DMMU/BMMU is accounting for the tranche release properly in the subsidiaryrecords and is monitoring the receipt of periodic reports and utilization certificates from theSHGs/ VOs/ BLF & systems to follow up on overdue reports are adequate. Quantify (numberand amount) of the funds transferred to the Community Institutions for which the reports and/orUCs are overdue.

m) Whether the accounts of the project are complied in a timely manner and the expendituresconsolidated on a monthly basis at the DMMU level and submitted to SMMU.

n) An assessment of compliance with provisions of financing agreements, especially thoserelating to procurement, accounting and financial matters.

o) Goods, works and services financed have been procured in accordance with the WorldBank procurement guidelines, financial & procurement manual of the project and financingagreements;

p) All necessary supporting documents, records, and accounts of all project activities havebeen kept in respect of all project activities and that clear synchronizations exists betweenaccounting records, accounts books and the periodic financial reports (internal and externali.e. Interim Financial Reports)

q) Adequate records are maintained regarding the assets created and assets acquired by theproject, including details of cost, identification and location of assets and verification of assetscreated out of the project and comment on its utilization;

r) All funds received under the project have been used in accordance with the financingagreements, with due attention to economy, efficiency and effectiveness, and only for thepurposes for which the financing was provided;

s) The auditor is expected to obtain and satisfactorily document sufficient audit evidence tosupport audit conclusions.

t) Inter unit fund transfers and Bank reconciliations have been carried out on a monthly basis.

u) Internal auditors to summarize key issues and risks from a review of a sample of villageaudit reports and comment on actions taken by DMMU/BMMU.

v) The auditor is expected to obtain and satisfactorily document sufficient audit evidence tosupport audit conclusions.

Community Level:In case of sample audit of Village institutions (SHG,VO and BLF) specific consideration will begiven to the following:

a) SHG Level: whether the SHGs have maintained are maintained the books/records toaccount for loans received and sanctioned to members, interest workings are correct,

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passbooks of members updated and decisions taken by the SHG are appropriately reflected inthe minute books.b) Village Level Organization/ Block Level Federation: check whether(i) the VLO/BLF has maintained proper books of account, including loan and interest registersas required in the COM; (ii) records relating to appraisal, approval and sanction of MCPs aremaintained properly; (iii) check a sample of assets procured at the VO/BLF level includingunder funds such as Community managed Food Security if any – check whether inventoryrecords are upto date and book balance agrees with physical stock balance.c) The reports and other documents submitted by the VO/BLF etc to the BMMU that form thebasis of providing funds by the Project (e.g aggregated MCP, UC etc) , provide clear linkageswith the books/records and reflect the correct position.d) The transactions are supported with necessary documents/bills/vouchers and are approvedby competent authority and forum.e) Goods, materials and services have been procured in accordance with the COM.f) Balance in Bank accounts, with third parties and the Project are duly reconciled.g) Whether Social accountability, transparency/ disclosure and social audit mechanisms,prescribed in the Manual, are being adhered to by the VO/BLF and their exists documentationevidencing compliance.h)The financial reports and utilization certificate submitted by VO/BLF to BMMU areconforming to Books of Accounts.i) All the required Books of Accounts as prescribed by Project and necessary supportingdocuments (Vouchers, Bills, registers, minutes books etc) have been kept in respect of allproject transaction and that clear synchronizations exists between accounting records,accounts books and financial reports.j) Decision taken are supported by adequate recording of decisions in the minutes books ofCommunity institutions.k) Adequate records (stock/asset register) are maintained to properly reflect the assets of theVO/BLF/SHGs including detail of cost, identification and location of assets and physicalverifications of assets.l)All funds (grants) received from the project have been used in accordance with the conditionsof the guidelines.

The audit will be carried out on quarterly basis and the sample coverage will beprojected in consultation before RFP is issued-this will be determined by the pace ofimplementation of project.

Data, services and facilities to be provided by the Client:

a. All the project documents, copy of agreement and relevant papers needed for Audit will beprovided by the ASRLMS.

b. The auditor should be given access to any information relevant for the purposes ofconducting the audit. This would normally include all legal documents, correspondence, andany other information associated with the project and deemed necessary by the auditor. Theinformation made available to the auditor should include, but not be limited to, copies of theBank’s Project Appraisal Document, the relevant Legal Agreements, copy of MoU betweenMoRD and the state, State Financial Management Manual for NRLP, Financial Rules andProcurement Manual and approved State Perspective and Implementation Plan (SPIP) andAnnual Plan of SRLM. The project will provide relevant documents, if any, required by theauditor.

c. The relevant World Bank policies and guidelines.

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d. A one day workshop will be organized by the SRLM for providing information about theNRLP and it should be attended by all the members of audit team.

e. Active support from the officials at SMMU/DMMU/BMMU levels.

Period, Timing and coverage of Internal AuditThe Internal Audit of DMMU & BMMU will be for the period from April 2012 to 31st March 2013in the financial year 2012-13 and will be carried out on a quarterly basis . The contract may berenewed after accessing the pace of implementation the projects need and performance of theconsultant for further two years on same terms.The selected firm(s) will submit in advance and agree with the DMMU and SMMU a ‘scheduleof audit’. The auditor should become familiar with the Project, and with the relevant policiesand guidelines of the NRLP and the World Bank (including those relating to disbursements,procurement and financial management and reporting).The audit will be carried out on aquarterly basis.

ReportingQuarterly Reporting & Annual reporting : The Auditors will provide a quarterly report for theunits audited (a summary of the key findings, implications and recommendations by eachBlock – including the SHG Federations & SHGs covered, must be prepared and will beprepared and discussed with the Block Mission Manager to enable the Project Management totake timely action. The report should be discussed and agreed with the auditable units andshould be structured in a manner giving the observations, the implications of the observations,the suggested recommendation and the management comments/ agreed actions. The auditobservations should be supported by instances and quantified, as far as practicable. Fourquarterly audits reports and one annual report will be provided each year.

The audit reports should be submitted within 30 days of the completion of the quarter. Thereports will be directed as under – The Project Management Letter to the State Mission Director. The individual audit reports to each of the auditable unit to the head of the unit. In case ofaudit report of the SHG Federation, a copy will also be submitted to the concerned BMMU.

In addition the internal auditor should provide an Executive Summary highlighting thecritical issues which require the attention of the SMD and the Executive Committee ofthe SRLM and the status of actions on the previous recommendations

Format of the Management Letter: The Management Letter will inter alia have the followingsections - Objectives of the audit; Methodology of the audit; Status of implementation of the financial management system; Status of compliance of previous audit reports, including major audit observations pendingcompliance; Key areas of weaknesses that need improvement; and Recommendations for improvements

Procedure of Conducting Audit at DMMU and BMMU.1. The auditor should give detailed work plan for conducting audit at BMMU and DMMU toSMMU and the concerned Office.2. The auditor should inform DMMU And BMMU before the start of audit.

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3. The auditor should give detailed work plan for conducting the audit.4. The audit questionnaire and audit work sheet shall be signed by the audit team member andofficials of BMMU/DMMU.5. Feedback as necessary can be given to the management on the outcome of the Audit fromtime to time. Information about any discrepancies can be shared with the management forrectification/clarification.6. During the audit, the internal Audit team shall interact with management staff for anyclarification.7. The auditor shall interact with the DMMU/BMMU/SMMU management before furnishing ofany report.8. The auditor should inform SMMU and the concerned office before start of the audit atDMMU/BMMU and furnish the detailed plan of the audit. The plan shall be finalized inconsultation with the management at SMMU level.9. After the teams of auditors complete their respective audit of the DMMU & BMMU, the headoffice auditor will consolidate the observations.10. The detail approach and methodology of audit should be provided by the auditorthemselves in the Request For Proposal (RFP).

Composition of review committee and review procedure to monitor consultants workThe proposed assignment will be reviewed and monitored by a Review Committee constitutedby SRLM. This committee will be constituted to interact with the Auditor, review and monitorthe progress of the assignment on a quarterly basis and take further remedial measures on thediscrepancies pointed out in internal audit.

KEY PERSONNEL

The list of key personnel and whose CVs and experience would be evaluated is as follows:

Sl No Key Professionals Description of services tobe provided

Experience

1. Partner/Audit Manager Overall coordination &planning, team leadership,reporting, liaison with client.

Qualified CharteredAccountant with atleast 7 yearsexperience as apartner withexpertise in the areaof internal auditplanning, executionand reporting.

2 Audit Team LeaderResponsible to lead theaudit teams in the field,planning and execution ofthe audits, discussion withHead of offices atBMMU/DMMU and Stateunits and reporting, writingand finalization.

Qualified CharteredAccountant with atleast 3 years ofexperience in internalaudit with ability tolead and team andinteract with seniorlevel govt officials.

3. Team Member. Audit of DMMU & BMMU. CA (Inter) withexperience inAccounting, auditand report writing.

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General:

Decision taken in Technical NegotiationIt was mutually discussed and decided that time lines of the conducting of the audit will be asfollows:-Quarter Period of Audit Timeline for DMMU

and BMMU auditorsTimeline for SMMUauditors

Final report of the audit will be submitted as per the timelines indicated above. The writtenacceptance of the report by the ASRLMS will considered as submission of the report.It was intimated to the auditors that before the start of audit, the ASRLMS will issue identitycard to every member of the audit team who have been proposed by the auditors in the RFP.Any change in the members due to the unavoidable cirmstances will only be done by theConsultants after seeking prior No Objection from the ASRLMS. The changed membersshould be of similar qualifications, any change in team without no objection from ASRLMS willnot be eligible for audit.

Annexure to Main Audit ReportPart A: Serious ObservationsIn this part, give details of serious audit observations such as ineligible expenses, majorlapses in internal controls, systemic weaknesses, procurement procedures not followed etc.

Part B: Other ObservationsObservations that are not serious in nature, but nonetheless require the attention of the Projector the GP should be detailed in this part.

Part C: Executive Summary to the project and Suggestions/Recommendations(based on summary of various SHG Federations)Provide an Executive Summary of the observations in Part A and B along withsuggestions/recommendations. Only those observations that are dealt with in either Part A or Part Bshould be included in this section Provide specific recommendations on internal control and systemicweaknesses.

Part D : Matters Requiring Immediate Attention1. Persisting Irregularities2. Books of Accounts3. Internal Controls and Systems4. Compliance with Financing Agreement, Project agreement, PIP, COM, PAD & FMmanual/devolution of power.5. Procurement Procedures6. Community Investment Fund7. Village Organization and SHG8. Training and exposure visit expenses and its variance - reason thereof (Physical andFinancial) from Budget under CID Component9. Computerized Financial Management System (Tally 9)10. Advances to Staff and Other and its periodicity11. Statutory Payments and its deviations12. Employee benefit entitlement13 .Specific case in observation14 .Assurance of completion of IUFR and timely submission.15. Tracking of financial Variance - Project component wise.

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16. Index of Report17. Suggestions.

SUGGESTED QUESTIONNAIRE FOR SMMU, DMMU & BMMU(Please provide brief details of divergence from procedure)

1. Whether the Office has maintained proper records showing full particulars, includingquantitative details and location of fixed assets?2. Whether all Assets including current assets like inventory have been physically verifiedduring the quarter?3. Whether the loans are being repaid in a timely manner along with the interest thereon?4. Date up to which the loans register is filled up.5. Whether the cash book is properly maintained and whether it tallies with computerizedsystem of accounting?6. Cash balance as on the date of audit.7. Whether expenditure has been made as per the delegation of power. Details of anydivergence should be mentioned.8. Whether bank book is properly prepared and whether the balance as per the pass bookconfirms with the balance as per the bank book.9. Whether proper training programs are being conducted.10. Whether the training expenditure is as per the Budget and whether the training report issubmitted for each residential training or not.11. Whether the books of accounts are reconciled between DMMU/BMMUs and with theSMMU books. If no, then reason and amount of such difference.12. Whether the T.A. bills are entered in the T.A. register on time and along with supportingvouchers.13. Whether CIF disbursed is properly entered in the CIF register, other details like number ofgroups, amount of CIF, Utilization certificate etc.14. Whether any advance is given to the staff. If yes, whether it is properly sanctioned andsettled within 15 days.15. Whether proper internal control system is followed.16. Whether the office is paying TDS and EPF regularly and on time.17. Whether any fraud on or by any office or person has been noticed or reported during theyear. If yes, the nature and amount involved.18. Whether log book of Generator hiring, Computer hiring and Vehicle hiring has beenproperly maintained or not.19. Whether stock register is maintained. If yes, last entry of goods number/voucher pagenumber of stock register and particulars of goods.20. Whether 100% vouching is done. If yes, total number of voucher, amount, component wiseexpenditure and budget wise variance.21. Whether all expenditure is made as per the budget. If not, the amount of variance.22. Whether inter BMMU and inter district reconciliation is made. If yes, whether there is anydifference and reason for such difference.

PREFACE

The Financial Management Manual of Assam State Rural Livelihoods Society is anintegral part of the Project Implementation Plan and has been prepared with theobjectives of facilitating smooth implementation, providing the fiduciary frameworkand detailing the overall financial management arrangement, accounting policies andprocedures applicable for the Mission. This Manual along with PIP, CommunityOperation Manual and the Financial and Administrative Rules overall controlframework of the Mission.

The manual is a dynamic document and may be amended as and when required andas learning accumulates with in the Mission. This Manual needs to be periodicallyupdated in tune with the change in the implementation of arrangement andsuggestions on the Manual are welcome which would be taken care of it in itssubsequent editions.

Smt. Archana Varma, IASI/c State Mission Director

National Rural Livelihoods Mission, Assam